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Europaudvalget 2001-02 (1. samling)
EUU Alm.del Bilag 182
Offentligt

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 13.11.2001

SEC(2001) 1752

2001

REGULAR REPORT

POLAND’S

PROGRESS TOWARDS ACCESSION

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2001

REGULAR REPORT

POLAND’S

PROGRESS TOWARDS ACCESSION

***********************

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Table of contents

A. Introduction.................................................................................... 6

Preface 6

Relations between the European Union and Poland........................................ 8

Recent developments under the Association Agreement (including bilateral trade)............ 8

Accession Partnership / National Programme for the Adoption of the Acquis .................. 9

Community aid .............................................................................................................. 9

Twinning ..................................................................................................................... 13

Negotiations / screening............................................................................................... 14

B. Criteria for membership.............................................................15

1. Political criteria ............................................................................. 15

Introduction................................................................................................................. 15

Recent Developments.................................................................................................. 15

1.1. Democracy and the Rule of Law.........................................................................16

The Parliament ............................................................................................................ 16

The Executive.............................................................................................................. 17

The Judicial system...................................................................................................... 19

Anti-Corruption measures............................................................................................ 21

1.2. Human Rights and the Protection of Minorities ...........................................21

Civil and Political Rights............................................................................................... 22

Economic, social and cultural rights.............................................................................. 23

Minority rights and protection of minorities................................................................... 24

1.3. General Evaluation...............................................................................................24

2. Economic criteria .......................................................................... 26

2.1. Introduction ...........................................................................................................26

2.2. Economic developments ......................................................................................26

2.3. Assessment in terms of the Copenhagen criteria...........................................29

The existence of a functioning market economy ............................................................ 29

The capacity to cope with competitive pressure and market forces within the Union...... 32

2.4. General evaluation ...............................................................................................35

3. Ability to assume the obligations of membership.......................... 36

Introduction................................................................................................................. 36

3.1. The chapters of the

acquis....................................................................................38

Chapter 1: Free movement of goods....................................................................38

Overall assessment ...................................................................................................... 41

Chapter 2: Free movement of persons ................................................................42

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Overall assessment ...................................................................................................... 43

Chapter 3: Freedom to provide services.............................................................43

Overall assessment ...................................................................................................... 45

Chapter 4: Free movement of capital .................................................................46

Overall assessment ...................................................................................................... 47

Chapter 5: Company law.......................................................................................47

Overall assessment ...................................................................................................... 48

Chapter 6: Competition policy..............................................................................49

Overall assessment ...................................................................................................... 50

Chapter 7: Agriculture..........................................................................................51

Overall assessment ...................................................................................................... 56

Chapter 8: Fisheries..............................................................................................58

Overall assessment ...................................................................................................... 58

Chapter 9: Transport policy .................................................................................60

Overall assessment ...................................................................................................... 61

Chapter 10: Taxation ............................................................................................62

Overall assessment ...................................................................................................... 63

Chapter 11: Economic and monetary union.......................................................63

Overall assessment ...................................................................................................... 64

Chapter 12: Statistics ............................................................................................64

Overall assessment ...................................................................................................... 65

Chapter 13: Social policy and employment ........................................................65

Overall assessment ...................................................................................................... 67

Chapter 14: Energy................................................................................................68

Overall assessment ...................................................................................................... 70

Chapter 15: Industrial policy...............................................................................71

Overall assessment ...................................................................................................... 72

Chapter 16: Small and medium-sized enterprises............................................73

Overall assessment ...................................................................................................... 73

Chapter 17: Science and research......................................................................74

Overall assessment ...................................................................................................... 74

Chapter 18: Education and training ...................................................................75

Overall Assessment ..................................................................................................... 75

Chapter 19: Telecommunications and information technologies...................76

Overall assessment ...................................................................................................... 76

Chapter 20: Culture and audio-visual policy.....................................................77

Overall assessment ...................................................................................................... 77

Chapter 21: Regional policy and co-ordination of structural instruments...78

Overall assessment ...................................................................................................... 79

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Chapter 22: Environment......................................................................................80

Overall assessment ...................................................................................................... 82

Chapter 23: Consumers and health protection..................................................83

Overall assessment ...................................................................................................... 84

Chapter 24 - Co-operation in the field of justice and home affairs ...............85

Overall assessment ...................................................................................................... 90

Chapter 25: Customs union .................................................................................92

Overall assessment ...................................................................................................... 93

Chapter 26: External relations ............................................................................94

Overall assessment ...................................................................................................... 95

Chapter 27: Common foreign and security policy.............................................96

Overall assessment ...................................................................................................... 97

Chapter 28: Financial control ............................................................................98

Overall assessment ...................................................................................................... 98

Chapter 29: Financial and budgetary provisions ............................................99

Overall assessment ...................................................................................................... 99

3.2. Translation of the acquis into the national languages.................................100

3.3. General evaluation .............................................................................................101

C. Conclusion..................................................................................104

D. Accession Partnership and National Programmes for the

Adoption of the

Acquis:

Global assessment ..........................108

1. Accession Partnership ................................................................. 108

Short-term priorities .................................................................................................. 108

Medium-term priorities.............................................................................................. 110

2. National Programme for the Adoption of the

Acquis

................. 112

Annexes.............................................................................................113

Human Rights Conventions ratified by the Candidate Countries, 30

September 2001............................................................................................114

Statistical data......................................................................................................115

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A. Introduction

Preface

In Agenda 2000, the Commission said it would report regularly to the European Council on

progress made by each of the candidate countries of Central and Eastern Europe in

preparations for membership, and that it would submit its first Report at the end of 1998.

The European Council in Luxembourg decided that

“From the end of 1998, the Commission will make Regular Reports to the Council, together

with any necessary recommendations for opening bilateral intergovernmental conferences,

reviewing the progress of each Central and Eastern European applicant State towards

accession in the light of the Copenhagen criteria, in particular the rate at which it is adopting the

Union

acquis”

… “The Commission’s reports will serve as the basis for taking, in the Council

context, the necessary decisions on the conduct of the accession negotiations or their extension

to other applicants. In that context, the Commission will continue to follow the method adopted

by Agenda 2000 in evaluating applicant States’ ability to meet the economic criteria and fulfil

the obligations deriving from accession.”

On this basis, the Commission presented a first series of Regular Reports in October 1998, a

second series in October 1999, and a third in November 2000. The Commission has prepared

this fourth series of Regular Reports with a view to the Laeken European Council in December

2001.

The structure followed for this Regular Report is the same as that used for the 2000 Regular

Report. In line with previous Regular Reports, the present Report:

describes the relations between Poland and the Union, in particular in the framework of the

Association Agreement;

analyses the situation in respect of the political criteria set by the 1993 Copenhagen

European Council (democracy, rule of law, human rights, protection of minorities);

assesses Poland’s situation and prospects in respect of the economic criteria defined by the

Copenhagen European Council (a functioning market economy and the capacity to cope

with competitive pressures and market forces within the Union);

addresses the question of Poland’s capacity to assume the obligations of membership, that

is, the

acquis

as expressed in the Treaties, the secondary legislation, and the policies of the

Union. This part gives special attention to nuclear safety standards, as underlined by the

Cologne and Helsinki European Councils. It encompasses not only the alignment of

legislation, but also the development of the judicial and administrative capacity necessary to

implement and enforce the

acquis,

as emphasised by the Madrid European Council in

December 1995, and confirmed by the Gothenburg European Council in June 2001. At

Madrid, the European Council underlined the necessity for the candidate countries to adjust

their administrative structures, so as to create the conditions for the harmonious integration

of those States. The Gothenburg European Council emphasised the vital importance of the

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candidate countries’ capacity to effectively implement and enforce the

acquis,

and added

that this required important efforts by the candidates in strengthening and reforming their

administrative and judicial structures.

This Report takes into consideration progress since the 2000 Regular Report. It covers the

period until 30 September 2001. In some particular cases, however, measures taken after that

date are mentioned. It looks at whether intended reforms referred to in the 2000 Regular

Report have been carried out, and examines new initiatives. In addition, this Report provides

also an overall assessment of the global situation for each of the aspects under consideration,

setting out for each of them the main steps which remain to be taken by Poland in preparing for

accession.

In accordance with this approach, the assessment of progress in meeting the political and

acquis

criteria (including Poland’s administrative capacity to implement the

acquis)

focuses on

what has been accomplished since the last Regular Report, complemented with a view of the

global situation for each of the aspects discussed. The economic assessment, for its part,

provides, besides an assessment of progress made over the reference period, also a dynamic,

forward-looking evaluation of Poland’s economic performance.

The Report contains a separate section examining the extent to which Poland has addressed the

Accession Partnership priorities.

As has been the case in previous Reports, “progress” has been measured on the basis of

decisions actually taken, legislation actually adopted, international conventions actually ratified

(with due attention being given to implementation), and measures actually implemented. As a

matter of principle, legislation or measures which are in various stages of either preparation or

Parliamentary approval have not been taken into account. This approach ensures equal

treatment for all the candidate countries and permits an objective assessment of each country

and its concrete progress in preparing for accession.

The Report draws on numerous sources of information. The candidate countries have been

invited to provide information on progress made in preparations for membership since the

publication of the last Regular Report. The National Programmes for the Adoption of the

Acquis

of each of the candidate countries, as well as the information they have provided in the

framework of the Association Agreement and in the context of the analytical examination of the

acquis

(screening) and the negotiations

, have served as additional sources. Council

deliberations and European Parliament reports and resolutions

have been taken into account in

the preparations. The Commission has also drawn on assessments made by various

international organisations, and in particular the contributions of the Council of Europe, the

OSCE and the International Financial Institutions, as well as that of non-governmental

organisations.

As in previous years, the Report does not mention any commitments undertaken or requests made in the context of the

accession negotiations

For the European Parliament the

rapporteur

is Jas Gawronski.

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Relations between the European Union and Poland

Recent developments under the Association Agreement (including bilateral

trade)

Poland has continued to implement the Europe Agreement and contributed to the smooth

functioning of the various joint institutions.

The Association Council met in October 2000 in Brussels. An Association Committee meeting

was held in Warsaw in May 2001. The system of sub-committees continues to function as a

forum for technical discussions.

The Joint Parliamentary Committee comprising representatives of the Polish and European

Parliaments met in November 2000 in Brussels and March 2001 in Warsaw.

Bilateral trade continues to grow. In 2000 EC exports to Poland stood at €33.6 billion, with EC

imports from Poland amounting to €23.1 billion. The EC trade surplus of €10.5 billion shows a

further decrease on the 1999 surplus (€11.4 billion) and continues the decline in the surplus first

noted in the last Regular Report. Poland’s share in total EC exports fell slightly to 3.6% while

Poland’s share in total EC imports, remained constant at 2.6% EC imports continued the trend

since 1997 and grew faster than EC exports and in consequence the trade gap when expressed

as the ratio of exports to imports continued to decrease in 2000. Concerning trade by product,

machinery and electrical goods represent the largest sector for both EC exports to and imports

from Poland. On the import side, machinery and electrical goods (56% growth), transport

equipment (43% growth), and base metals and articles (38% growth) all grew strongly.

Regarding agricultural products, a new agreement on reciprocal concessions with Poland

entered into force in January 2001 on an autonomous basis, pending the conclusion of an

Additional Protocol to the Europe Agreement. As a consequence of this agreement,

approximately 91% of traditional EC agricultural imports from Poland is duty-free while 43%

of the EC agricultural exports to Poland is exempted from duties. A second round of bilateral

negotiations for trade liberalisation is presently being prepared and would cover more sensitive

sectors, in which current trade is low, in particular due to a high degree of tariff protection. In

the fisheries sector negotiations with Poland on mutual concessions were concluded between

negotiators in July 2001. Negotiations concerning processed agricultural products are ongoing.

There remain a number of outstanding issues with regard to the implementation of the Europe

Agreement, from complex long-standing issues such as steel restructuring and Special Economic

Zones, to product-specific trade issues. There is a general willingness to seek solutions through

the functioning of the various joint institutions although in some instances satisfactory solutions

have been a long time coming.

Although the Europe Agreement provides for entry into its second stage from February 1999, a

number of legal requirements have yet to be fulfilled to permit this transition. These were

covered in the 1999 regular report. While some of the remaining impediments to transition have

been removed others remain. The issue of transition is of increasing importance as it is only in

the second stage of the Europe Agreement that capital movements from the EC to Poland will

benefit from national treatment.

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During the reporting period there have been a number of high-profile disputes between the

Polish administration and investors in Poland. In some instances mutually satisfactory solutions

have been reached, others remain unresolved. While difficult to quantify it is clear that,

irrespective of the individual circumstances, such cases have had a negative impact on

perceptions of Poland as a location for investment. The EU notes with concern the difficulties

which EU investors have faced in a number of high-profile cases in Poland. Transition to the

second stage of the Europe Agreement would be an important indicator of efforts to rectify this

perception.

There have been renewed efforts to clarify and resolve a number of outstanding trade issues.

The general level of co-operation is good but some issues have proved to be more difficult to

resolve than others and the difficulty in ensuring that solutions to specific or general problems

have been fully implemented persists. Some difficulties remain with regard to the

implementation of the Custom's Code, and the disputed safeguard measures on yoghurts have

been extended without the opening of quotas.

The progress noted in the last regular report with regard to progress in the area of certification

has, by and large been maintained. There have been reports of difficulties with regard to the

automatic issuing of certificates requiring either mandatory certification or producer certification

as a result of the non-implementation of the new procedures by some of the certifying bodies.

At this stage it is not possible to determine whether this represent teething troubles or a genuine

weakness in administrative capacity. A further obstacle to EC producers is the fact that the

Polish list of products for which mandatory certification is required, while having been amended

to remove products which require no certification in the EC, still contains products subject to

producer certification inside the Community.

The Regulation imposing definitive anti-dumping duties on imports of ammonium nitrate

originating

inter alia

in Poland was published in January 2001. A review of the measures

imposed in December 1994 on imports of urea ammonium nitrate was initiated in December

1999; this resulted in a decision to continue measures with the necessary Regulation being

published in May 2001. With regard to bailer twine, the Regulation was amended in August

2001. Concerning wooden pallets, the Regulation imposing definitive anti-dumping duties

published in 1997 was further amended in August 2001, following what is termed a

“newcomer” review of the anti-dumping measures.

Accession Partnership / National Programme for the Adoption of the Acquis

A revised Accession Partnership was adopted in December 1999. Its implementation is

reviewed in chapter D of this Report. This Regular Report is accompanied by a proposal from

the Commission to update the Accession Partnership.

In June 2001 Poland submitted a revised National Programme for the Adoption of the

Acquis

(NPAA) to the Commission, in which it outlines its strategy for accession, including how to

achieve the priorities contained in the Accession Partnerships (Chapter

D below).

Community aid

There are three

pre-accession instruments

financed by the European Community to assist the

applicant countries of Central and Eastern Europe in their pre-accession preparations: the

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Phare

programme;

SAPARD,

which provides aid for agricultural and rural development; and

ISPA,

which finances infrastructure projects in the fields of environment and transport. These

programmes concentrate their support on the Accession Partnership priorities that help the

candidate countries to fulfil the criteria for membership.

For the years 2000-2002 total financial assistance to Poland amounts annually to €398 million

from Phare, 186.6 million from SAPARD, and between €312 and €385 million from ISPA.

The

Phare

programme has been providing support to the countries of Central and Eastern

Europe since 1989, helping them through a period of fundamental economic and social

transition and political change. Its current “pre-accession” focus was put in place in 1997, in

response to the Luxembourg European Council’s launching of the present enlargement process.

Phare provides the applicant countries of Central and Eastern Europe with support for

institution building (around one third of the Phare allocation), investment to strengthen the

regulatory infrastructure needed to ensure compliance with the

acquis

(equally around one third

of the allocation), and investment in economic and social cohesion (the remaining one-third of

the Phare allocation). This support comprises co-financing for technical assistance, “twinning”

and investment-support projects, to help these countries in their efforts to adopt the

acquis

and

strengthen the institutions necessary for implementing and enforcing the

acquis.

This also helps

the candidate countries develop the mechanisms and institutions that will be needed to

implement Structural Funds after accession and is supported by a limited number of measures

(investment or grant schemes) with a regional or thematic focus.

During the period 1990 – 2000, the Phare programme allocated €2 534 million to Poland. The

2001 Phare Programme

for Poland consists of a national allocation of €396 million,

concentrated on the following priorities:

•

the reinforcement of institutional and administrative capacity in the fields of public finance, the

cadastre, tax administration, transport, insurance supervision, energy market regulation,

promotion of NGOs, SME and export development, regional policy, and statistics (

€45

million)

•

internal market (customs, certification and standards, competition and consumer protection,

medicines and medical devices, food safety, audio-visual policy, public procurement, and

chemicals) (€34 million)

•

the strengthening of co-operation in the field of Justice and Home Affairs (border

management, fight against organised crime, visa and migration policies, justice co-operation,

police co-operation, border infrastructure) (€50 million)

•

institution building in agriculture and fisheries (for common market organisations, agricultural

advisory services, organic farming, animal feeds control, IACS, FADN, agricultural

information systems, veterinary administration, and preparation and training for CAP

instruments) (€33 million)

•

institution building in environment (for water resources protection, Natura 2000, biological

safety system, control of Seveso II, radiation protection, and strengthening of the local

environment administration) and air quality monitoring systems (€22 million)

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•

economic and social cohesion (human resources development and SME development

sectoral programmes and business related infrastructure in eight target regions of the

country)(€170 million)

•

Participation of Poland in Community programmes (€42 million).

An additional €56 million has been allocated for a cross-border co-operation (CBC)

programme with Germany, the Czech Republic, Slovakia, and for a special action within the

Baltic Sea region.

Poland also participates in and benefits from Phare funded multi-country and horizontal

programmes, such as TAIEX and the Small and Medium-sized Enterprises Facility.

Furthermore, Poland participates in the following Community programmes: Fifth Framework

programme on Research and Technological Development, Leonardo, Socrates, Youth for

Europe, SAVE II, SME, FISCALIS, IDA, and CULTURE 2000. Negotiations were

concluded regarding Poland’s participation in the European Environment Agency and, following

the ratification and entry into force of the agreement, the formal participation of Poland in the

Agency will start in January 2002

In order to streamline Community legal procedures and thereby facilitate future participation of

Poland in Community programmes, a Decision has been adopted by the EU-Poland

Association Council establishing the general principles for such participation.

Overall, the impact of Phare has been positive. Effective transfer of know-how, equipment and

financial resources has taken place in a number of important fields such as industrial

restructuring and privatisation, SME development, trade and investment promotion, energy,

land registration, veterinary and phytosanitary administration, environmental investments and

institution building, etc. Phare support to transport, environment, agriculture and SME

development has succeeded in developing sector strategies and initiating essential institutional

and financial mechanisms servicing enterprises in these sectors. In other sectors, such as

customs, taxation, justice and home affairs, fisheries, coal and steel, and employment, Phare

support contributed to the establishment of sector development, institutional or restructuring

strategies and plans.

In Poland, Phare for example played a particularly important role in:

•

the transport sector, selected sections of construction and renovation of the A4 Motorway

Wroclaw-Katowice-Krakow project (126 km) were financed by Phare ( 105 million)

€

together with the EIB (€375 million). In the railways sector, Phare funding (€38 million)

contributed to the renovation of the E30 railway line in the South of the country, following

the 1997 floods, together with the EIB (€161 million) and the Government (€156 million)

privatisation, where preparatory work, the vouchers for the mass privatisation programme

and bad debt work-outs prior to the privatisation of commercial banks, were funded by

Phare (€20 million) together with the EBRD

a regional development programme, where SME development was funded by Phare (€50

million) which co-financed nearly 200 municipal SME infrastructure projects and co-funded

over 1,000 SME investment projects through a grant scheme along with commercial banks.

•

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This created over €150 million of public and private investment and generated more than

11,000 jobs in the regions concerned

•

institution building in the veterinary administration, regional policy administration, and the

judicial sector were funded by Phare (€10 million) to reform the sectors concerned and

bring these up to the standards in the EU

social alleviation of restructuring of the coal and steel sectors, where Phare funding (€ 61

million) in particular provided for the counselling and retraining of the unemployed, for SME

development and for reconversion measures in Silesia.

•

The Phare Review for 2000 confirmed the accession-driven approach and emphasised the

importance of helping countries to prepare for the Structural Funds. The Review foresees the

possibility that management of the Phare funds can be fully decentralised from 2002 if the strict

pre-conditions set down in the Co-ordination Regulation 1266/99 are met. Second, Phare

programming can be moved onto a multi-annual basis if supporting strategies are in place. Third,

the trends introduced in 1997 continue with an increased role for Delegations, further

streamlining of procedures and, lastly, increasing emphasis on raising the verifiable and

quantifiable impact of Phare projects in institution building, investment in compliance with the

acquis

and economic and social cohesion.

As regards

SAPARD,

the Polish Rural Development Plan was formally approved by the

Commission in October 2000. The Multi-Annual Financing Agreement in January 2001 and

the Annual Financing Agreement in March 2001, thereby formally committing the EC financial

contribution for the budget year 2000 amounting to €171.6 million.

The programme is based on two major priorities (improvement of the market efficiency of the

agri-food sector and improvement of conditions for economic activities and job creation).

The average annual outlays would amount to €380 million during the period 2000-2006, of

which €171.6 (in 1999 prices) million contributed by the European Community.

The Polish authorities submitted in September / October 2001 the act of accreditation to the

Commission. The act is presently under consideration by the Commission.

As concerns the

ISPA

programme, the Polish Government has drawn up strategy papers for

transport and the environment and the priorities for ISPA support expressed in these documents

have been integrated into the Polish Government’s December 1999 preliminary National

Development Plan. The Commission and the Polish authorities have together established a

shortlist of priority projects for ISPA funding in the transport and environment sectors over the

period 2000-2006. For transport, these concern the construction and renovation of motorways,

national roads and railways on the Trans-European transport network according to European

standards. In the case of the environment, the main ISPA priorities for Poland are related to

drinking water and waste water, and solid waste treatment for the major cities of Poland. All

financial memoranda for ISPA projects for the year 2000, amounting in total to €348.2 million,

were signed. Sectoral Authorising Officers were appointed by the Polish Government and in the

case of a number of these projects, tenders are currently in progress and contracts for

implementation are being concluded. It is expected that Poland will receive the same amount of

funding from ISPA in the year 2001.

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Implementation of the ISPA projects will follow the same institutional framework as for the

Phare programme, with the National Fund at the Ministry of Finance being in charge of overall

financial management and a number of Implementing Agencies being responsible for the

technical implementation, subject to prior endorsement by the Commission. For Phare and

ISPA, it is however planned to further decentralise running of the programmes to the Polish

authorities (EDIS).

For the programme and financial management of SAPARD, a different system will apply which

reflects the EAGGF (European Agricultural Guidance and Guarantee Fund) rules and is based

on a fully decentralised approach through an accredited paying and implementing agency.

Twinning

One of the main challenges the candidate countries continue to face is the need to strengthen

their administrative capacity to implement and enforce the

acquis.

As of 1998, the European

Commission proposed to mobilise significant human and financial resources to help them in this

respect, through the process of twinning of administrations and agencies. The vast body of

Member States’ expertise is now being made available to the candidate countries through the

long-term secondment of civil servants and accompanying short-term expert missions and

training.

To start with, twinning focused primarily on the priority sectors of agriculture, environment,

public finance, justice and home affairs and preparatory measures for the Structural Funds. It

now covers all sectors pursuant to the

acquis.

A total of 372 twinning projects, primarily in the fields of agriculture, environment, public

finance, justice and home affairs and preparation for the management of Structural Funds, have

been funded by the Community between 1998-2000. These represent the principal priority

sectors that have been identified in the Accession Partnerships. Other important sectors of the

acquis

have also been addressed through twinning. For example, social policy, fight against

drugs, transport, and telecommunications regulation.

Thanks to the strong support and response from EU Member States 103 twinning partnerships,

funded by Phare 1998 and involving all candidate countries and almost all Member States are

coming to an end or have been concluded. Under Phare 1999 a further 124 projects are being

implemented and the programming exercise for Phare 2000 includes a further 145 twinning

projects. The 2001 programming exercise foresees 131 twinning projects in all Phare

beneficiary countries as well as Cyprus and Malta. Furthermore, the candidate countries are

being offered the possibility of drawing on Member States’ expertise through Twinning light

(projects of up to 6 months' duration), to address well-circumscribed subjects of limited scope,

which emerge during the negotiation process as requiring adaptation. It is estimated that around

250 twinning projects are operational throughout the candidate countries at any one time.

In Poland, the eight 1998 twinning projects are nearly completed and 17 twinning projects

under Phare 1999 are on-going. New areas covered are

inter alia,

financial control, tax and

customs, civil service development, and road transport. For Phare 2000, there are 44 twinning

projects with Poland, of which a considerable number have started in the meantime, including

twinning between regional administrations in order to prepare Poland for regional policy and the

management of future structural funds. For Phare 2001, there will be 39 twinning projects, of

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which 5 are "twinning light" projects. Statistics show that a considerable range of both Member

States involved and policy sectors covered in Poland. Nearly all Member States are or will be

engaged in twinning, allowing Poland to benefit from the variety of administrative models and

cultures in the European Union.

Negotiations / screening

The analytical examination of the

acquis

(screening) has taken place in the context of meetings

of the Association Committee and the sub-committees.

Since the opening of the accession negotiations, substantial discussions on the individual

chapters of the

acquis

started, and by June 2001, negotiations on all chapters (with the

exception of chapter 30 - Institutions and chapter 31 – Other) had been opened.

By the end of September 2001, the following 17 chapters had been provisionally closed: Free

movement of goods, Free movement of services, Energy, Economic and monetary union,

Statistics, Social policy and employment, Industry, Small and medium sized undertakings,

Science and research, Education and training, Telecommunications and information

technologies, Culture and audio-visual policy, Consumers and health protection, Customs union,

External relations, Common foreign and security policy and Financial control. Negotiations

continue for the remaining chapters.

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B. Criteria for membership

1. Political criteria

Introduction

The political criteria for accession to be met by the candidate countries, as laid down by the

Copenhagen European Council in June 1993, stipulate that these countries must have achieved

“stability of institutions guaranteeing democracy, the rule of law, human rights and respect for

and protection of minorities

.”

The 2000 Regular Report on Poland’s progress towards accession, the Commission

concluded, as previous reports have done, that:

“Poland continues to fulfil the Copenhagen political criteria.

With regard the areas for action identified last year, Poland has undertaken initial steps in the

reform of the judiciary and in preparing the ground to deal with the most pressing bottlenecks.

Such measures are important, as the existence of an effective judiciary is an essential element in

the implementation and enforcement of the

acquis.

Similarly with regard to the fight against

corruption, initial steps have been taken but further efforts are needed, including the adoption of

the necessary legislation. Developments with regard to equal opportunities have been less

marked."

The section below aims to provide an assessment of developments in Poland since the 2000

Regular Report, as well as of the overall situation in the country, seen from the perspective of

the political Copenhagen criteria, including as regards the overall functioning of the country’s

executive and its judicial system. Developments in this context are in many ways closely linked

to developments regarding Poland’s ability to implement the

acquis,

in particular in the domain

of justice and home affairs. Specific information on the development of Poland’s ability to

implement the

acquis

in the field of justice and home affairs can be found in the relevant section

(Chapter

24 – Co-operation in the field of justice and home affairs)

of part

B.3.1.

of this

report.

Recent Developments

Parliamentary elections were held on 23

September 2001. These have resulted in a

government being formed by the electoral grouping led by the Social Democratic alliance in

coalition with the Polish Peasants party (PSL).

Throughout the changes, Poland’s political institutions have continued to function properly and

in a stable manner. The 1997 Constitution has proved to be a stabilising factor since its

introduction.

These principles have been emphasised in the Charter of Fundamental Rights of the European Union, that was

proclaimed at the Nice European Council in December 2000.

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The new government continues to support EU membership as a top political priority and a

broad consensus on this issue exists among a majority in the parliament.

1.1.

Democracy and the Rule of Law

As mentioned in the previous Regular Reports, Poland has achieved stability of institutions

guaranteeing democracy and the rule of law. This section therefore focuses on the most

significant developments of the past year.

The Parliament

In April last, the Sejm adopted new election regulations and an amendment to the Act on

Political Parties. The new election law has made major changes in relation to the old regulations.

The counting of votes to parliamentary seats is now conducted in line with a modified St.

Lague’s method rather than the previous d’Hondt system. The new system is also one of

proportional representation, but based on a different method of allocating seats to votes. It is

considered to give a more accurate reflection of voter preferences and so diminish the over-

representation of large parties which characterised the previous system. Elections to the Senate

are now on the basis of a majority system.

The national list has been abolished: as a consequence, all deputies will be elected by voters in

their constituencies. This coincides with the redefinition of constituencies within the act to

correspond to the changes brought about by the territorial reform of 1999. The law defines 41

Sejm electoral districts, comprising 7 to 19 seats. Elections to the Senate will be conducted in

40 constituencies with 2 to 4 senators elected in each district.

The amendment to the Act on Political Parties has also introduced a number of significant

changes relating to the conduct of elections. The most important changes are aimed at regulating

the issue of party financing with a view to curbing possible corruption.

Under the new regulations, parties will receive substantial public funding, amounting in total to

around 55-60 million PLN ( €13.75-15 million) annually. If they obtain at least 3 percent of

votes in the next elections parties will be entitled to a budget subsidy. The amount will depend

on the number of valid votes cast for the party.

In parallel, party financing will be subject to increased scrutiny. Parties will no longer be

allowed to conduct public collections and companies will no longer be able to finance political

parties in any form whatsoever. Contributions from private persons cannot exceed 11 000 PLN

(€2750) annually. All payments have to be registered. In addition, parties are now banned from

earning income from real estate rental or commercial activity.

These provisions mark an important step towards ensuring the transparent working of the

political system. At the time of writing it is too early to draw any conclusions as to the efficiency

of the measures, some of which will in any case only come into effect at the end of 2001.

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The Executive

The most significant development has been the adoption of the law on public information, which

codifies the freedom of information provisions set out in the constitution. The reporting period

also saw the implementation for the first time of the new Presidential Elections Act. This has

resulted in some initial difficulties but demonstrates that the new procedures are a significant

advance. Further efforts have been undertaken to strengthen the civil service.

In May 2001 the State Elections Commission (PKW) completed the verification of presidential

campaign reports. This was conducted, for the first time, in accordance with new, stricter rules

governing campaign financing introduced by an amendment to the Presidential Elections Act

adopted by the Sejm in April 2000. The examination proved that all election committees have,

in various ways, breached the Act. As a result, the PKW decided to reject the statements of all

twenty-one candidates.

Some of the breaches were relatively minor, others were more significant (notably with regard

to accepting donations from companies with foreign capital or which were financed from public

funds, which did not derive from companies’ profits or which came from individuals with

unknown or false identities).

In line with the new regulations each election committee has seven days to appeal the PKW’s

resolution to the Supreme Court. If the Court upholds the decision or it is not appealed, the

PKW decides if it will refer the case to the prosecutor’s office or the "kolegium" (a body of

citizens having jurisdiction over minor offences). A court may sentence an election committee to

pay a fine of between € 1000 PLN (€ 250) and 100 000 PLN, (€25 000) while a "kolegium"

may impose a fine up to 5000 PLN (€1250). At the time of writing the Supreme Court had

upheld the PKW’s decision in all 15 cases where an appeal was made and the next steps were

awaited.

The verdicts suggest that the difficulties have arisen in large part out of an

unfamiliarity with a new system as well as the complexity and difficulty of the system itself.

Nonetheless, it should be recalled that the new legislation is a significant step in strengthening

democratic procedures. Following the 1995 elections only 10 out of 17 candidates submitted

election campaign reports, and there was no provision for sanctions for non-compliance with

this requirement.

Previous Regular Reports commented on developments with regard to the territorial reform

which took place in 1999. In overall terms, the transition to the new system appears to have

been completed without undue difficulties and the new administrations are now fully operational.

The long term financial situation remains to be determined, as the legislation on the budgetary

provisions has again been rolled over.

The law on public information was signed by the president at the start of October 2001. It sets

out a clear definition of the right to public information, based around the entitlement to

information which is in the public interest, the entitlement to review official documents and the

entitlement to access to the sittings of elected government bodies. As always with such

legislation, effectiveness will in large part be determined by the exemptions from the law and its

interpretation. With regard to the exemptions, these are largely taken from existing legislation.

The success of implementation will become apparent over time.

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The legislative framework defining the civil service and its functioning is largely unchanged since

the 2000 Regular Report. Workers in the civil service at national and regional level fall into a

number of categories; "Civil servants" as defined by the 1999 law form the managerial corps,

while the most numerous category at the national level is that of "civil service employees." The

most significant change has been the adoption of an ordinance on the remuneration of civil

service employees and an ordinance on the determination of official positions requiring

professional qualifications, professional grades of civil servants and issues of remuneration and

benefits.

The major point of concern continues to be the number of civil servants (i.e. those who passed

the selection procedure) in relation to the total civil service corps. By the end of September

2001, the number of civil servants was 831 , i.e. some 0.7% of the total of about 116 000

employees of the central administration. This number represents an increase of around 270 on

last year as a result of graduation from the National School of Public Administration (in 2001,

58 alumni were appointed as civil servants) and the conclusion of the annual competition, from

which 218 were selected. This compares to 161 civil servants appointed under the 2000

exercise.

As was noted in the 2000 report, the increase in the number of civil servants, despite some

acceleration last year compared to the first year of operation of the law, is still too slow to

produce an independent, stable and competent civil service in the immediate future.

The risk of political instability attached to more senior posts in the public administration has

been exacerbated by the expiry at the end of June this year of the transitional period for the

provision of the Law on Civil Service. This imposed an obligation to organise open competitions

for the top posts in the administration (from directors-general upwards, including the head of the

civil service himself). As a consequence, all those who were appointed to their posts without a

competition were formally dismissed on 1 July 2001. Pending the completion of the necessary

competition, 16 of the 69 director-general level posts are vacant. In the meantime these

vacancies are being filled by managerial staff from the department as “acting” directors-

general.

The civil service is under the constitutional supervision of the Prime Minister, who appoints the

Head of Civil Service, assisted by the Office of Civil Service. The Office is composed of 5

basic structures: the Secretariat of the Head of the Civil Service (including press service and

editors of the Civil Service Bulletin), the Office of the Director General, the Department of

Recruitment and Selection, the Department of Civil Service Corps Management, and the

Department of Training and Development of Civil Service Corps. Besides, the Prime Minister

can call on an advisory body, the Civil Service Council, consisting of 16 members (half of them

representing the Parliament and half chosen by the Prime Minister himself).

The position of the Civil Service Office requires some strengthening, as its key function is the

supervision of the civil service. The role and functions of the Office within the governmental

structure are perhaps not fully understood or appreciated. It is generally associated with training

programmes and recruitment procedures instead of being perceived as the supervisory body

and the institution which addresses policy issues, sets the direction for the development of

structures and builds the culture of the civil service as such. As a result, some of the Office's

proposals for structural change have had a rather weak response from the bodies to which they

were directed.

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While further efforts have been made over the last year through legislation but also notably

through information campaigns, to improve the profile, status, standing and rewards of the civil

service, the long-standing disincentives to a civil service career remain. These disincentives will

continue to need to be addressed in the years ahead to ensure the recruitment and retention of a

body of independent, experienced officials.

The Judicial system

The 2000 Regular Report noted a range of developments in the structure, staffing and training of

the judiciary. These changes and reforms have been followed through during the reporting

period as part of a long term approach to improving the functioning of the judiciary. In some

areas, notably the court structure, new legislation has been adopted.

Actions to rationalise the court structure and improve its functioning have continued over the

reporting period. As of July 2001, the number of regional courts in operation was thirty eight.

Furthermore, the territorial jurisdiction of common courts has been harmonised with the

administrative borders of the new voivodships. This harmonisation is intended to facilitate better

co-operation between the judicial administration and other public bodies functioning under the

territorial structure which was put in place in 1999.

The number of civil-criminal chambers (courts dealing with consumer rights cases, and fiscal

offences of up to 2 years of imprisonment) has reached 254.

The law on the Common courts system which entered into force in October 2001 has

transferred competence for "petty" cases - civil claims below 5000 Zloty (around €1250) -

from the civil criminal chambers to the

grodzki

chambers (courts of justice)

The November 2000 amendment to the law on the national court register entered into force in

January 2001. The amendment provides the legal framework for the functioning of the

computerised National Court Register. In January, 2001 14 regulations executing this law,

issued as ordinances of the Minister of Justice, entered into force. The National Court Register

is a centralised, fully computerised register of companies, associations, other social and

professional organisations, foundations, public health care institutions and insolvent debtors.

The law on the National Penal Register referred to in the 2000 Regular Report entered into

force in June 2001. The law sets forth detailed rules of organisation, operation, and scope of the

National Penal Register. The Register arises out of the transformation of the Central Register of

Convicts.

In May 2001 legislation amending (i) the law on land registers and mortgage, (ii) the law on the

Civil Procedure Code, (iii) the law on court costs in civil cases and (iv) the Law on the notariat

was adopted. The amendments are intended to improve the court registration system by

accelerating proceedings related to real estate registration, and to fully introduce the modernised

and computerised real-estate register. As a part of this process, staffing levels at the real-estate

referendarz

to 390, an

increase of 100 over the reporting period.

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There has been a slight increase in the number of judges (up to 8 335), and prosecutors (up to

5 313). The increase in the number of judges (+348) has in large part taken place in order to

meet the expected increase in cases following the introduction of the code of minor offences.

The 1999 Strategy on computerisation continues to be implemented, although considerable

needs remain. The total number of computers within the judiciary was increased to 7,500 by

end of 2000 with the bulk of these machines situated in the courts rather than the prosecutor's

office services. In parallel, networking at national level is being completed for both the courts

and the prosecutor’s offices. Work is under way on the creation of a specific software package

and network for prosecutors dealing with organised crime.

Training, notably with regard to European Community law, has steadily increased. Community

Law is compulsory in the last 6 months of training, together with International Law. In addition

to this initial training, there are a number of vocational training courses organised on general and

specific areas of EC Law.

The backlog of cases is an issue which the previous Regular Report dealt with in some detail.

The efforts listed above represent positive steps to improve the efficiency of the judicial system,

leading to a reduction of the backlog. At this early stage in their implementation such measures

have helped to stem the tide but have not yet managed to reverse its flow. This holds equally

true for the regional disparities in the length of the backlog, with the situation in Warsaw

remaining more difficult than for the country as a whole.

During 2000, the courts settled almost 10% more cases than in 1999: the total number of cases

settled being almost 7.37 million. However, as a result of the increase in cases referred to the

Court there was a very small increase in the backlog to 1.81 million cases.

It should be noted, however, that in some categories of cases, the average duration of the legal

procedure has been reduced. This is particularly true for real-estate registration cases, which

lasted an average of 3.3 months in 2000 compared to 3.7 in 1999, and for civil cases in district

courts ( 4.3 months in 2000, 4.7 months in 1999) and in regional courts (5.6 months in 2000,

5.9 months in 1999). Initial figures indicate that this trend has continued into the first half of

2001

Concerns about corruption within the system persist. To some extent there is a divergence

between perception and reality. Reports suggest that some 20 cases were reported in 2000,

while the Central Bureau of Investigation indicates that three cases were investigated last year.

Efforts have been made by the government to increase the remuneration of court employees,

judges and administrative staff so as to counteract one factor often linked to corruption.

Concerns about corruption in the judiciary have led to a broader reflection as to the functioning

of the judiciary and in particular the issue of judicial independence. Article 173 of the Polish

constitution ensures the independence of the courts, and article 178.1 provides for the

independence of judges. According to article 180, judges cannot be dismissed against their will,

and according to art. 181 they enjoy near total (both professional and personal) criminal

immunity. Such immunity can only be lifted by a disciplinary tribunal which is made up of judges

and which meets in closed session. The lack of transparency of this system is a source of

concern and makes a precise assessment of corruption problematic.

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Complaints continue to be received and dealt with by the Ombudsman for Citizens' Rights, who

has specifically criticised citizens' lack of access to to justice (length of procedures and cost of

legal action) in his report for 2000 presented to the Sejm in May 2001.

Anti-Corruption measures

The issue of corruption has been covered in detail in the two previous Regular Reports. It is an

issue which remains high on the political agenda and in the public consciousness, not least as a

result of the spate of recent prominent allegations. Irrespective of whether the specific

allegations turn out to be true or not, there is a general perception that corruption is widespread.

This is damaging both domestically and internationally.

The last Regular Report underlined that while efforts were being made to fight against

corruption, there appeared to be a lack of a clear overall strategy. A recently constituted

government task force on corruption is a first step in drawing together the various stands of

policy and the actors involved in the fight against corruption.

Some progress has been made in adopting legislative measures to combat corruption.

Legislation on money laundering was adopted in December 2000. The law creates the legal

framework for the establishment of the office of General Inspector of Financial Information,

which will oversee financial transactions with a view to curbing money laundering. In parallel, the

Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the

Proceeds from Crime has been ratified. The convention entered into force in April 2001.

On the ground, a sustained effort will be required to step up the fight against corruption both by

the police and the border guard service. Recent data suggest that in 2000 there was a marked

increase in the number of cases detected: up to 1899, compared to 1357 in 1999. Convictions

also increased, rising from 408 in 1999 to 581 in 2000.

The law on public information is an important administrative development in the fight against

corruption. Further measures are being undertaken to reduce the incidence of corruption in the

civil service. Anti-corruption training has been upgraded and 200 people have benefited from

this revamped approach in 2001. Work on the code of ethics continues.

Poland signed the Council of Europe Civil Law convention on Corruption in April 2001.

Poland also participates in the Council of Europe Group of states against corruption (GRECO)

and continues to participate in the monitoring of anti-corruption measures effected by the

OECD working group on bribery in international commercial transactions.

1.2.

Human Rights and the Protection of Minorities

As reported in previous Regular Reports, Poland continues to respect human rights and

freedoms. The following section concentrates on major developments since the last Regular

Report.

Since the ratification in October 2000 of Protocol no. 6 to the European Convention for the

Protection of Human Rights and Fundamental Freedoms on the abolition of the death penalty,

and the ratification in November 2000 of the Council of Europe Framework Convention on the

protection of National Minorities (entered into force April 2001), Poland has ratified most of

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the major Human Rights conventions (see Annex). Poland has an established track record of

providing appropriate international and constitutional legal safeguards for human rights and

protection of minorities.

The concept of non-discrimination is enshrined in the Constitution, but to date the transposition

of this principle into legislation, including the anti-discrimination

acquis,

has been limited (see

Chapter 13 - Social policy and employment).

Civil and Political Rights

Basic rights continue to be respected, and some notable developments have been registered

since the 2000 Report. In contrast there are some areas which continue to give cause for

concern, notably custody.

With regard to the

death penalty,

following formal abolition in May 2000, Poland in October

2000 ratified additional Protocol no. 6 of 28 April 1983 (concerning the abolition of death

penalty) to the European Convention for the Protection of Human Rights and Fundamental

Freedoms . This entered into force in November 2000 and along with previous legislative

changes brings Poland into line with the

acquis

in this important field.

Over the last year there have been increasing concerns raised about

degrading treatment

the Police and abuses of the power of

custody.

With regard to the former there is no evidence

that this is either systematic or systemic: human rights groups have, however, expressed concern

about the lenient punishments given to officers in cases where such treatment has taken place.

As far as custody is concerned, there does appear to be a deeper problem. During the last

year the European Court of Human rights has found Poland to be in breach of article 5 of the

European Convention of Human Rights relating to deprivation of liberty.

Another frequently mentioned problem has to do with the “sobering-up stations” (Izba

Wytrzezwien). These are establishments where the police may place drunk people under a

regime which is not formal custody to “sober up”. A number of outside observers have

expressed their concerns about the system (notably problems associated with the rights of

detainees, mistreatment of foreigners and a lack of access to a lawyer). The law on sobriety

which was adopted in July 2001 amends the system. It provides for a right of complaint and a

requirement of notification of detention, elements intended to reduce the abuse of the system.

The situation with regard to

trafficking in human beings

is a complex one. Poland is

simultaneously a source, a host and a transit country. The Polish authorities have increased

efforts to combat trafficking, and as a result the number of persons indicted increased from 24

in 1999 to 119 in 2000. One other consequence is a sharp increase in the number of victims.

In the overwhelming number of cases indictments result in prosecutions: over the period 1995 to

1999, of the 156 people who went to trial only 5 were acquitted. Of the persons sentenced,

one third received suspended sentences and there was only one sentence of greater than 5

years.

Conditions in Polish

prisons

have, if anything, deteriorated over the last year, with an increase in

the number of prisoners and a 14% reduction in budgetary resources compared to 2000. The

Ombudsman warned in his annual report for 2000 of the possibility of violent disturbances if

the situation did not improve.

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As concerns

asylum,

the new aliens law was adopted. In addition, amendments made to the

education act give free access to secondary education both to refugees’ and asylum seekers’

children.

Article 53 of the Polish constitution enshrines the principle of

freedom of religion.

One issue

which received much attention domestically and internationally in 2001 was the 60

anniversary

of the Jedwabne massacre. The position of the mainstream state representatives has been a

further indication, along with the previous handling of the protection of former Nazi

concentration camp sites, of their desire to address the diverse concerns expressed and to seek

solutions which take such concerns into account as sensitively and as fully as possible.

As far as

free speech

is concerned, the situation remains as described in the 2000 Regular

Report, with continued concerns expressed about the use of the slander laws and the protection

this affords politicians relative to the general public.

With regard to the right to

privacy,

the 2000 Regular Report underlined concerns arising out of

the adoption of the Classified Information law. During the reporting period, the Constitutional

Court found in favour of the Ombudsman, who brought a case against a provision of the Law

relating to the denial of clearance to a specific individual without the right of appeal. Both the

police and the border guards have been subject to new legislation which provide for a greater

regulation of the use of wiretaps.

Poland continues with the Vetting or

Lustracja

process, which provides for the vetting of

Government members, senior officials, officers of the state and members of the judicial system

regarding the nature of their involvement with the former communist regime. Concerns persist

about the use and possible abuse of the system and the lack of transparency of the process.

The issue of

property ownership

continued to be sensitive. Legislation relating to the restitution

of property seized between 1944 and 1962 did not complete its passage into law. As a result,

individual cases for compensation must now pass through the Polish legal system.

The role assigned to the

Ombudsman

is to monitor the protection of civic and political rights

guaranteed by the Constitution. The office is widely used, with almost 50 000 letters received

in 2000, 31 000 of them formal submissions. The Ombudsman can sue public authorities, and

appear before the courts and tribunals in support of individuals who are victims of violations of

their basic rights. In just under 20% of cases, a positive settlement was arrived at. This

compares with just 1% where the ombudsman's suggestions were not acted on or where no

remedy could be found. The remainder of the complaints, 70%, could not be substantiated.

The Ombudsman also has an important political role, as he can raise awareness of public

opinion and state authorities on any issue. The Ombudsman has declared his willingness to use

any means to enhance the transparency of public life, to guarantee the right to information in

order to contribute to fighting corruption effectively. To this end he has taken cases before the

constitutional court. (see

privacy

above)

Economic, social and cultural rights

The issue of

equal opportunities

has been increasingly debated over the reporting period, and

received a specific reference in the Ombudsman's annual report, and there has been some

legislative progress over the reporting period. The recent parliamentary elections have seen a

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marked increase in the number of female elected representatives in both houses. In the Sejm,

20% of members are female (previously 13.5%) and in the senate 23% (previously 12%).

In respect of

children’s rights,

a new Ombudsman was appointed in February 2001 following

the departure of the original Ombudsman, who had taken up office in 2000. It is too soon to

judge the effectiveness of this newly created position. A country – wide campaign called

“Childhood without violence” was launched.

No major change was made to the law protecting the

disabled.

However the companies

employing mostly disabled persons (zaklady

pracy chronionej)

saw their tax reduction

partially cancelled and changes to the law on telecommunications revoked the provision of

price reductions for the disabled.

Minority rights and protection of minorities

In Poland, respect for, and protection of,

minorities

continues to be assured, and as noted

above, during the reporting period Poland ratified the Council of Europe Framework

Convention for the Protection of National Minorities

The administrative infrastructure for addressing minority issues is now well developed. At the

national level there is the Interministerial Team for National Minorities, which includes among

others the ministries of the interior, justice, foreign affairs, education, employment and social

affairs. The team is mandated to oversee minority issues, including the development of policy,

the co-ordination of actions and the prevention of the infringement of minority rights. The Unit

for National Minorities within the Citizenship Department of the Ministry of Interior and

Administration provides support for the interministerial team, as well as maintaining contacts

with local authorities and minority groups and examining complaints. Independently of these

government bodies, a Unit for the Protection of Foreigners’ and National Minorities’ Rights was

set up in the Ombudsman’s Office specifically to deal with minority rights issues. Such issues

have traditionally accounted for less than 1% of the complaints received and it is hoped that the

specific unit will provide a clearer contact point for complaints.

With a specific focus on the Roma, in February 2001 the Council of Ministers adopted a

Pilot

government programme for

the

Roma community in the Malopolska province for the

years 2001-2003.

The plan identifies the priority areas of education, the fight against

unemployment, health, living conditions, security, culture, and knowledge within and about the

Roma minority. The project is a first step by the government to combat the precarious situation

of the Roma minority in Polish society: as noted in the 2000 Regular Report there are frequent

reports of wide-spread discrimination, and the economic and social circumstances of the Roma

are poor, falling below those of the population in general.

1.3.

General Evaluation

In its 1997 Opinion, the Commission concluded that Poland fulfilled the political criteria. Since

that time, the country has made considerable progress in further consolidating and deepening the

stability of its institutions guaranteeing democracy, the rule of law, human rights and respect for

See "Making a success of enlargement: Strategy Paper and Report of the European Commission on the progress towards

accession by each of the candidate countries", COM (2001) 700.

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and protection of minorities. Over the past year, further efforts have been made in this

direction. Poland continues to fulfil the Copenhagen political criteria.

In the area of public administration progress in the implementation of the 1999 Civil Service

Law continues. Further efforts are required to speed up the pace of implementation and ensure

that an independent, well trained and motivated civil service is in place by the time of accession.

Poland has continued to make progress in reforming the judiciary and in reducing the most

pressing bottlenecks. The pace of reform needs to be accelerated and issues relating to judicial

immunity further addressed.

Additional steps have been taken, including the adoption of much needed legislation, in the fight

against corruption, which remains a source of serious concern. The focus must now be on

ensuring a coherent approach to corruption, implementing the legislation and above all on

developing an administrative and business culture which can resist corruption.

There has been some progress in establishing the legal framework for equal opportunities and

further work needs to be undertaken in this regard.

A new element which has come to light has been the abuse of custody, which has been reported

in certain cases. This needs to be addressed and the first steps have already been taken in this

respect.

The reinforcement of administrative and judicial capacity, improving the operation of the

judiciary and its training in EC law were Accession Partnership priorities. Work is underway

but further efforts are needed.

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2. Economic criteria

2.1.

Introduction

In its 1997 Opinion on Poland’s application for EU membership, the Commission concluded:

“Poland can be regarded as a functioning market economy; it should be well able to cope with

competitive pressure and market forces within the Union in the medium term.”

In its 1998 and 1999 Regular Reports, the Commission while acknowledging that progress has

been made, confirmed its Opinion.

In its 2000 Regular Report the Commission found that:

“Poland is a functioning market economy and should be able to cope with competitive pressure

and market forces within the Union in the near term, provided it continues and completes its

present reform efforts.”

In examining the economic developments in Poland since the 1997 Opinion, the Commission’s

approach was guided by the conclusions of the European Council in Copenhagen in June 1993

which stated that membership of the Union requires:

the existence of a functioning market economy;

the capacity to cope with competitive pressures and market forces within the Union.

In the analysis below, the Commission has followed the methodology applied in the Opinion, as

well as in the 1998, 1999 and 2000 Regular Reports.

2.2.

Economic developments

Poland is experiencing a significant slowdown, primarily attributable to domestic factors.

Real output expanded by 4% in 2000, with economic activity slowing markedly in the second

half of last year and slow growth continuing into this year. In the context of strong export

performance, the deceleration of output reflects a slowdown in domestic demand, and in

particular private consumption, in the face of tighter monetary policy, moderate growth in real

wages and rising unemployment. Consequently, a number of macroeconomic imbalances

identified in last year’s Regular Report have receded. On the one hand,although annual average

inflation was 10.2% for the year 2000 as a whole compared to 7.3% for 1999, it is now

dropping quickly. On the other hand, the current account deficit contracted to 6.3% of GDP in

2000, down from 7.5% in 1999. This is happening, however, at the cost of higher

unemployment and a growing fiscal deficit.

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Main economic trends

Poland

Real GDP growth rate

Inflation rate

- annual average

per cent

1996

6.0

1997

6.8

1998

4.8

1999

4.1

2000

4.0

2001 latest

0.9 Q2

per cent

19.9

14.9

11.8

7.2

10.1

6.9

September

4.3

September

- December-on-

December

per cent

18.6

13.3

8.5

9.8

8.4

Unemployment rate, end-

year

- ILO definition

per cent

General government

budget balance

per cent of

GDP

12.3

-2.3

11.2

-4.3

10.6

-2.4

13.9

-2.1

16.1

-3.5

18.2Q1

Current account balance per cent of

GDP

million

ECU/Euro

Foreign debt

- debt export ratio

- gross foreign debt

-2.3

-4.0

-4.4

-8.1

-6.3

-2,571

-5,065

-6,156

-11,716

-10,788

-5,660

Jan-

August

per cent

million

ECU/Euro

118.9

32,711

110.7

35,884

96.3

38,308

119.0

45,267

87.7

46,739

Foreign direct investment

in flow

- balance of payments

per cent of

data

GDP

million

ECU/Euro

3.1

3,542

3.4

4,328

4.0

5,677

4.7

6,821

5.3

8,996

4,015

Jan-

August

Privatisation and structural reforms are progressing.

The on-going privatisation of large

state-owned enterprises is encouraging, in various industrial sectors (including the power sector,

the petroleum and chemical industries, alcohol production, shipbuilding). 165 firms were sold

through direct privatisation in 2000, and already 15 in the period to the end of March 2001.

Privatisation receipts continue to finance the four large social reforms of 1999 (pensions, health,

education, together with the territorial reform leading to a greater degree of decentralisation).

These have been costly and some implementation difficulties remain (as in the case of the reform

of the pension system), but the reforms are laying the basis for sustainable growth.

PROXY HICP since 1997 (see methodological notes).

Moving 12-month average rate of change, national CPI

National CPI

Source: Website of National Bank

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Main Indicators of Economic Structure in 2000

Population (average)

GDP per head

thousand

PPS

Per cent of EU

average

Share of agriculture

in:

- gross value added

- employment

Investment-to-GDP ratio

Gross foreign debt/GDP

Exports of goods & services/GDP

Stock of foreign direct investment

38,646

8,700

per cent

Million Euro

Euro per head

3.3

18.8

25.3

27.3

31.2

25,956

671

P: provisional data

Poland is catching up in real terms; the growth slowdown, however, is compounding the

problem of high and rising unemployment.

Poland is one of the few transition economies

which has experienced substantial and sustained growth. GDP per head in purchasing power

standards (PPS) represented 39.2% of the EU average in 2000, steadily increasing from less

than 34% in 1995. There are significant regional disparities. Polish regional GDP data shows

that 4 Eastern Voivodships are on a per capita basis below 77% of the national average and

that their highest unemployment rate was 24.5% in 2000, against virtual full employment in

Warsaw. Economic activity rates (2000: 56.6%) and employment rates for both men and

women are still decreasing, and were 61.2% for men and 49.3% for women in 2000.

Unemployment has rapidly increased from some 12.5% in 1999 to 16% in 2000 and 18.2% in

Figures have been calculated using the population figures from National Accounts, which may differ from those used in

demographic statistics.

Agriculture, hunting, forestry and fishing.

Data refer to Gross fixed capital formation as % of GDP.

Estimated.

Figures have been calculated using the population figures from National Accounts, which may differ from those used in

demographic statistics.

Data refer to 1999.

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the first quarter of this year, with particularly high rates for young people (35%) and for low-

skilled workers.

2.3.

Assessment in terms of the Copenhagen criteria

The existence of a functioning market economy

The existence of a functioning market economy requires that prices, as well as trade, are

liberalised and that an enforceable legal system, including property rights, is in place.

Macroeconomic stability and consensus about economic policy enhance the performance of a

market economy. A well-developed financial sector and the absence of any significant barriers

to market entry and exit improve the efficiency of the economy.

There is broad political consensus on policies geared towards entrenching the transition

process and preparing for EU accession, but in the past year there has been a

deterioration in the co-ordination of economic policies.

There is a growing difference of

views between policy-makers on the nature of recent macroeconomic difficulties, and the

balance of risks looking into the future. This is at the root of a breakdown in the economic

policy co-ordination process between monetary and fiscal authorities. Divergences between the

two sides prevented a correction in the imbalance of the policy mix. Poland is in breach of its

OECD commitments for the final liberalisation of capital movements. In October 2001 Poland

submitted its Pre-accession Economic Programme (PEP) to the Commission for the first time,

for assessment and debate in the framework of the newly established economic dialogue with

EU Member States.

Economic activity has slowed sharply since the second half of 2000,

bringing growth for the

full year 2000 to an estimated 4%. Private consumption, which accounted for some 67% of

GDP in 2000, increased by only 2.4% in 2000 compared to a buoyant 5.4% in 1999. The

growth of investment is estimated to have slowed down from 6.5% in 1999 to 3.1% last year.

The investment ratio, however, remains high at more than 25% of GDP. The deterioration in

enterprise profitability is a hurdle for the recovery in output. GDP rose by 1.6% in the first half

of 2001 compared to the same period in 2000. Fixed investment spending even fell by 3.4% in

the first half of 2001 compared to the same period in 2000. Consumers and investors’

confidence has suffered as a result of rising unemployment, high interest rates, the slowdown in

growth and a certain degree of policy uncertainty.

The main imbalance in the Polish economy is the high level of unemployment.

The ILO-

compatible unemployment rate is now above 18%. Since the Russian crisis, a new round of

labour shedding has taken place, helping to preserve competitiveness, but at the cost of

continuously rising unemployment and a resulting decrease in domestic demand. A large number

of unemployed receive no unemployment benefits. In 2000, total employment decreased by

3%. The labour market has not been stagnant: many jobs have been created, but have not

compensated for job destruction in the presence of skill gaps and low mobility. The

phenomenon, however, is compounded today by growth in the working-age population, and

will be compounded tomorrow by the prospective shift of labour out of agriculture. The

participation rate was in 2000 at a low, at 56.6%.

Inflation has been consistently dropping.

In September 2001, the consumer price index

(national CPI) fell to 4.3% over the corresponding period in 2000 from 8.5% in December.

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This reflects the weakness in domestic demand, but also a reversal of exogenous rises in food

and fuel prices that negatively affected price developments in the first half of last year. Average

inflation last year was 10.2% (proxy Harmonised Index of Consumer Prices).

The appropriateness of the monetary policy stance has therefore become one of the main

policy issues.

After a significant tightening of rates in the course of last year, the Monetary

Policy Council has initiated a new cycle of gradual cuts (450bp since the beginning of the year).

Since the floatation of the Polish currency, the exchange rate has appreciated, primarily due to

the high real interest rates. This has contributed to a tightening of monetary conditions, although

a downward correction on the Zloty took place since July 2001.

Poland had achieved in 2000 a commendable degree of consolidation of its public

finances during the more recent stages of its transition, but the budget situation has

worsened in 2001.

General government net borrowing (the general government deficit

according to harmonised EU standards - ESA 95) had been brought down since the mid

1990s, but was estimated to have increased again to 3.5% of GDP last year

. However, on a

different accounting basis (GFS-compatible basis), the authorities announced in May 2001 that

they had substantially revised downwards their estimates of the fiscal out-turn for last year. This

would imply that a fairly significant degree of fiscal consolidation has actually taken place in

2000. This year, the budgetary deficit has widened further, mainly because of the effect of lower

growth and lower inflation on revenues. In July, the government revised the deficit target for the

State budget to 3.9% of GDP. In 2000, the large number of off-budget funds and agencies

have not had the same negative impact on the overall fiscal stance as in the past, but the need to

better integrate their financial management within the procedures used for State budget

expenditure remain.

There are other medium-term structural challenges on the fiscal front: reducing the tax

burden, defining an appropriate degree of deficit reduction by cutting current spending,

and making room for increased capital expenditures.

At this stage in the reform process,

this requires a profound reform of the social security systems in Poland (in order to free up what

are termed “fixed elements” of the budget). Transfers to households represent broadly half of

total general government expenditure, or around 20% of GDP. Within social spending, there

should still be room for the tightening of eligibility rules on disability and sickness benefits. Initial

reforms in these two areas have already produced savings, but further parameter changes could

be envisaged. The agricultural pension system (KRUS) also suffers from targeting and incentives

problems (the contribution is at a flat rate while benefits are generous and not adjusted to

means). The budget subsidy to KRUS remains stable at around 2% of GDP.

The policy mix needs re-balancing.

In 2000, tighter fiscal policy should have allowed for a

further loosening of monetary policy, so as to avoid the present slowdown in domestic demand

becoming self-perpetuating. This is still the case in 2001 provided budget targets are adhered to

on the expenditure side and the revised deficit reflects automatic stabilisers on the revenue side.

External trade performance has remained remarkable.

In 2000, the increase in export

volumes was estimated at 15%. In the first quarter of this year, real export growth remained

Two figures are given for the government balance. One is based on the most commonly used national concept, and the

other is calculated according to the European System of Accounts (ESA 95), which was reported by the candidate

countries for the first time this year.

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very impressive at 18% over the first quarter of 2000. Together with slowing imports, this has

allowed a current account correction. Last year, the current account deficit contracted to a

more comfortable level of 6.3% of GDP, down from 7.5% in 1999. In addition, to date, the

current account deficit has been largely financed by non-debt creating inflows of capital in the

form of direct foreign investment.

Prices are broadly liberalised, and the private sector is responsible for the vast bulk of

wealth creation.

The private sector accounts for more than 70% of GDP and 72% of

employment (but only half of the economy’s fixed assets). The only prices that are subject to

regulation are the prices of pharmaceutical products, electricity and heating fuel, and house

rents, but with cost recovery or maintenance (in the case of housing) taken into account in price

setting. Although still in need of restructuring, agriculture has also been widely privatised. By the

end of March 2001, the Agricultural Property Agency had sold or leased 95% of the land that it

took over at the beginning of the transition.

There are no significant legal or institutional barriers to the establishment of new firms in

Poland, and property rights are clearly established and transferable.

Although a certain

degree of bureaucracy and difficulties with the enforcement of court decisions constitute

obstacles to business activity, the entrepreneurial climate is generally good,. In 2000 there was a

net creation of more than 12 000 registered commercial companies, or some 9% of the total

number of such firms. The framework for enterprise creation is adequate, with the entry into

force since last year of the law on economic activity, the law on the simplification of registration

of new firms and simplification of the customs duty law.

The main remaining problem is the implementation of the framework for bankruptcies

and the exit of firms.

In 2000, the number of bankruptcy procedures filed in the courts

increased by 41% (more than 4000 new cases), but problems remain with the protection of

creditors and the ability to seize collateral. Commercial courts still suffer from a lack of

resources and training to become more efficient. Aside from bankruptcy, the new commercial

code in force since 1 January 2001 is beneficial for large firms and their consolidation through

mergers or acquisitions.

The new commercial code should also contribute to improved corporate governance.

There have been a number of legal conflicts between various stakeholders on the strategic

direction of individual companies, in particular in cases where a strategic investor holds a

minority stake but where the State remains a majority passive owner or maintains special rights.

In banning the use of stocks with multiple voting rights and increasing the prerogatives of the

annual shareholder meetings, the new commercial code contributes to higher standards in this

area. Further efforts to protect minority shareholder rights are nevertheless needed, and should

be helped by the progressive development of the stock market and the role of pension funds.

The financial sector is developing quickly, but from a low base.

Commercial banks

dominate the banking market (with 72% of assets and 73% of net loans in 2000). The

government maintains ownership in only 7 institutions, but the role of PKO Bank Polski SA and

Bank Gospodarstwa Krajowego (BGK) SA remains significant (they hold more than 30% of

total bank deposits). One of the main characteristics of the sector is the high degree of foreign

ownership. There are now 46 banks with majority foreign equity, representing 69.6% of the

total assets of the sector at the end of last year.

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Financial intermediation remains low.

Banking assets represented some 62% of GDP at the

end of 2000, while the credit to GDP ratio is still around 28%. The Polish equity market is

embryonic, with a capitalisation of less than 19% of GDP. The corporate bond market (as well

as other fixed income markets) is also small, but should develop in parallel with the growth of

institutional investors.

Greater competition is now taking place, and is putting pressure on earnings in the

banking sector.

Banks are also facing increasing competition for retail deposits from non-bank

financial firms. The interest rate spread in 2000 was still relatively high at 6.7%.

There is no immediate threat to stability of the financial sector in the short run.

Bank

capitalisation has so far been adequate, and the regulatory and supervisory framework has been

substantially upgraded in the recent past. This year in particular, the submission by the

government to parliament of the amendment to the banking law has been an important step in

the right direction, in particular to empower supervisors to conduct consolidated supervision.

The only source of concern at this stage for the banking sector is the sharp deterioration in asset

quality witnessed over the last two years. At the end of 2000, total classified loans (i.e.

comprising the three categories of irregular claims: substandard, doubtful, loss) had risen to

14.7% of total loans, from a ratio of around 10% before the start of the Russian crisis.

The capacity to cope with competitive pressure and market forces within the

Union

The ability to fulfil this criterion depends on the existence of market economy and a stable

macroeconomic framework, allowing economic agents to make decisions in a climate of

predictability. It also requires a sufficient amount of human and physical capital, including

infrastructure. State enterprises need to be restructured and all enterprises need to invest to

improve their efficiency. Furthermore, the more access enterprises have to outside finance and

the more successful they are at restructuring and innovating, the greater will be their capacity to

adapt. Overall, an economy will be better able to take on the obligations of membership the

higher the degree of economic integration it achieves with the Union before accession. Both the

volume and the range of products traded with EU Member States provide evidence of this.

A sufficient degree of macroeconomic stabilisation has now been sustained for a

sufficient period of time to avoid distortions in the decisions of economic agents.

Poland is

a functioning market economy.

Poland is giving itself the means to build up an adequate level of human capital to

compete in the global economy.

In terms of education, gross enrolment ratios have increased

over the decade for both secondary and tertiary education, as a percentage of the relevant age

group. For tertiary education, nevertheless, that ratio was a relatively low 28% in the

1999/2000 school year. More importantly, Poland continues to invest in the education and the

training of its future workforce. The share of public expenditure on education as a percentage of

GDP (above 5%) and as percentage of total public expenditure (above 11%) has been

maintained throughout the period at adequate levels in international terms. In the last few years,

there has been more specifically a marked increase in the capital expenditure share in total

public spending on education, mostly directed at the primary level. Labour force restructuring

and the emergence of a demand for new skills does, however, require a greater effort on higher

education. Only around 7% of the population hold a university degree and the share of higher

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education in total public education expenditure has remained fairly stable (around 16%). The

higher education system is not however under any immediate stress from sheer numbers, as

evidenced by a still relatively low ratio of students to teachers (14.6 in 1998). The overall

impact that the 1999 reform of the education system will have on the overall adequacy of skills

to labour market demands in the Polish economy remains to be judged.

There is a need, however, to improve the functioning of labour markets to accommodate

the rapid pace of labour shedding associated with enterprise restructuring. Tackling the

unemployment problem requires measures to enhance job creation.

The skills gap and the

lack of labour mobility due to constraints on housing and transport feature among the underlying

obstacles to reducing unemployment, alongside the issues relating to the cost of labour (tax

wedge, lack of differentiation in the minimum wage) on which there seems to be a broad

consensus. However, even though there is some agreement on the causes, policy-makers differ

on remedies, and legislative changes needed to increase flexibility in the labour code (one of the

possible targets for reform) have not found a constituency in Parliament.

Poland has by now experienced more than half a decade of investment boom, but an

improvement in transport and other physical infrastructure is needed to avoid growth

bottlenecks.

The investment ratio was 25.3% of GDP in 2000, a ratio that has remained

broadly steady since 1998, but up from levels closer to 20% in the middle of the last decade.

Taking into account progress in enterprise restructuring and structural reforms over the recent

years, it seems that the efficiency, and therefore their rate of return, of these investments is

adequate. State capital expenditure in 2000 represented some 2.9% of GDP, a somewhat

lower level than in previous years (3.6% of GDP in 1997 and 1998, 3.2% in 1999). For 2001,

the budget law contained a target of 3.1% of GDP. This would situate Poland above the EU

average, but below EU countries with a lower than average GDP per head.

Telecommunications infrastructure is still catching up, with rapid growth in mobile telephony and

a continued increase in the number of main lines per head (283 for 1000 inhabitants). Last year,

motorway construction also picked up significantly.

Foreign direct investment (FDI) inflows are high, and play a key role in lifting the level of

technology and the competitiveness of the Polish economy. In 2000, net inflows recorded on a

cash basis came close to € 9bn, slightly less than in 1999. Due to its size and the potential of its

domestic market, Poland has captured – albeit belatedly - the largest share of inflows to the

region. The stock of accumulated inflows stood at the end of last year at € 26bn. This is still not

particularly high on a per capita basis. In addition, a large share of these investments has so far

been privatisation-related. The challenge will be to maintain inflows after the completion of the

big bulk of the privatisation programme, with possible difficulties in selling off the less attractive

sectors. So far, the level of green-field investment has been small compared to total FDI

inflows. A strategy for increasing investment was adopted in March of this year by the

government and a draft law on investment support has been sent to Parliament, but it is difficult

to estimate whether these initiatives will be either of a sufficient scale or devoid of distortions.

On the restructuring of state-owned enterprises, some progress is evident

with coal. The

restructuring of the steel sector is awaited although the adoption of the steel restructuring law in

July 2001 and the restructuring plan for the steel industry by the Polish government in June of

this year are steps in the right direction. A further test looking into the future will be the

implementation of the restructuring of PKP, the railways, after a long and protracted

parliamentary process to put in place the necessary legislative framework. The restructuring of

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the farm sector is also lagging, and will require, in the near future, policy responses to help the

economy absorb shed labour in rural areas. Now, obstacles to the smooth functioning of the

markets for land and labour in rural areas are lowering labour mobility, delaying land

consolidation and an increase in agricultural productivity. Some of these obstacles also relate to

social policy, and in particular the negative incentives embedded in tax and benefits systems (for

example in the agricultural pension system, KRUS).

Small and medium-sized enterprises are the driving force in the economy, but still suffer

from a low level of innovation and difficulties in accessing finance.

The SME sector

accounts for two thirds of total employment and half of GDP and exports. For most Polish

firms, investment is still mostly financed through retained earnings. Commercial bank lending to

SMEs is particularly limited: more than 10% of total credit from banks is directed to the ten

largest publicly listed companies. This, however, seems to be changing as a result of increased

competition between banks, forcing many of them to enter new, more risky segments of the

market. For SMEs, guarantee schemes and other access to finance support mechanisms have

yet to reach a critical mass and do not appear to reach micro-enterprises in rural areas

sufficiently well.

Government interference in Poland’s markets remains low. However, a few problems

remain.

The biggest source of market distortion remains the presence of

state

aid in both

private and

state-owned

firms, even though the entry into force in January 2001 of the new

State aid law is bringing Poland closer to international standards in this area. Hidden subsidies

to the State-owned sector take the form of sizeable tax and social security arrears. Inter-

enterprise arrears between State-owned firms suggest the need for tighter financial discipline in

the sector. The presence of non-tariff barriers is also extensive. Remaining problems range from

the complexity and lack of transparency in standards and certification matters to the failure to

apply in a uniform fashion some provisions of the customs code.

Poland is a larger and therefore more domestic-oriented economy than other candidate

countries, but trade integration with the EU is very high.

As an indicator of trade

integration, the ratio of exports and imports of goods and services to GDP increased to 69.3%

in 2000, up from an average of 26% in the previous four years. Merchandise exports to the EU

represent 70% of total exports.

The share of high value-added products is still low in Poland’s export portfolio, but the

evolution is positive

and suggests a shift towards capital and skilled labour intensive goods.

Manufactured goods in the electrical and mechanical industry group account for 37.4% of

exports to the EU, against 32.8% in 1999. New areas of export specialisation are emerging

(e.g. motor engines) and the existing level of intra-industry trade reflects the impact of FDI on

the upgrading of Poland’s manufacturing and export capacity. This, together with a strong

increase in labour productivity since the onset of the Russian crisis, has allowed Poland to

maintain external competitiveness in the face of real exchange rate appreciation against its main

trading partner. In 2000, the zloty’s real effective exchange rate (deflated by the CPI)

appreciated by about 9%.

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2.4.

General evaluation

Poland is a functioning market economy. Provided that it continues and intensifies its present

reform efforts in a consistent policy environment, it should be able to cope with the competitive

pressure and market forces within the Union, in the near term.

In the first part of the reporting period, it maintained adequate macroeconomic stability, and its

growth performance was again solid, before growth experienced a significant slowdown starting

in the second half of last year. Privatisation continued and there has been further restructuring in

sensitive sectors such as the coal and power industries. The legal framework for business has

been strengthened with the adoption of the new bankruptcy law and the new Commercial

Code.

The sharp decline in growth reflects in large parts problems in the macroeconomic policy mix –

the co-ordination of fiscal and monetary policy. Already high unemployment has risen further

and the budget deficit is on a rising path. Fiscal adjustment must take place in order to

contribute to a more suitable policy mix and not to endanger the medium-term sustainability of

public finances. This would also help to reassure markets and boost business confidence. The

authorities should speed up privatisation and restructuring in some key sectors, such as in some

traditional industries or in agriculture. They should proceed with clear plans to remove obstacles

to market exit and indirect state aid in the form of tax or social security arrears, which hinder the

functioning of market forces. The implementation of bankruptcy procedures must improve.

Further measures need to be taken to improve Poland’s infrastructure and the response of the

labour markets to changing economic conditions.

See "Making a success of enlargement: Strategy Paper and Report of the European Commission on the progress towards

accession by each of the candidate countries", COM (2001) 700.

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3. Ability to assume the obligations of membership

Introduction

This section aims to update the Commission’s 2000 Regular Report on Poland’s ability to

assume the obligations of membership - that is, the legal and institutional framework, known as

the

acquis,

by means of which the Union implements its objectives. Alongside an evaluation of

relevant developments since the 2000 Regular Report, this section seeks to provide an overall

assessment of Poland’s ability to assume the obligations of membership, and of what remains to

be done. This section is structured to follow the list of twenty-nine negotiating chapters, and

incorporates an assessment of Poland’s administrative capacity to implement the

acquis

in its

various aspects. Poland’s progress in translating the

acquis

into its official language is assessed

in a separate section.

The European Council in Madrid in December 1995 referred to the need to create the

conditions for the gradual, harmonious integration of the candidates, particularly through the

adjustment of their administrative structures. Taking up this theme, in Agenda 2000 the

Commission underlined the importance of effectively incorporating Community legislation into

national legislation, and the even greater importance of implementing it properly in the field, via

the appropriate administrative and judicial structures. This is an essential pre-condition for

creating the mutual trust indispensable for future membership.

The European Council in Santa Maria da Feira and in Gothenburg in June 2000 and June 2001

respectively recalled the vital importance of the applicant countries’ capacity to implement and

enforce the

acquis,

and added that this required important efforts by the applicants in

strengthening and reforming their administrative and judicial structures.

Building on the

assessment of Poland’s administrative capacity provided in the 2000 Regular Report, the

present Report seeks to add further depth and detail, focusing on the main administrative

structures which are required for implementing the

acquis

in its various aspects.

In the 2000 Regular Report, the Commission concluded that :

“The fresh impetus which can be noted since the Sejm debate on European integration in

February and the creation of the Parliamentary Committee on European Law is already

beginning to bear fruit with a marked acceleration in the adoption of the acquis in comparison to

the last reporting period. While much has been done towards regaining momentum these efforts

will have to be further intensified and the flow of legislation likewise increased. The need for

further effort applies even more to the strengthening of the administrative capacity to adopt the

acquis. There have been developments in this regard, in particular in the implementation of civil

service legislation, but not commensurate with the progress in adopting legislation.

In contrast to the 1999 regular report, there has been progress in adopting legislation in key

areas of the internal market acquis, standards and certification and state aid. In both cases the

necessary framework legislation has been adopted. The emphasis must now turn to the

secondary legislation necessary to implement the acquis in these areas and the accompanying

administrative capacity. The adoption of new intellectual property legislation is a welcome step

although difficulties with the industrial property law remain to be resolved. Legislative progress

has also been made in the area of consumer protection. It is still necessary to strengthen the

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capacity and competence of the relevant structures for enforcement as well as the dissemination

of information on the new regulations.

Poland’s track record in the free movement of services and capital has been good but there has

been little progress over the reporting period. Public procurement and the movement of persons

are other areas where progress is urgently required if Poland is to be smoothly integrated into

the internal market.

There has been some progress in industrial policy, notably in the automotive sector although the

lack of concrete progress in steel restructuring remains a cause for concern.

In the agriculture sector, progress has been made in the elaboration of the rural development

plan, however a clear coherent and fully budgetised strategy for the sector remains to be

developed. Overall, Poland has not yet launched the substantial transformation which is

needed, in terms of policy, acquis and structures, in the agriculture and fisheries sectors and in

both sectors the necessary legislative work is lagging behind.

In the environment sector despite considerable work on the development of drafts little has

been achieved in the way of adopting legislation, similarly for the energy and transport sectors

where legislative developments have been limited. Framework legislation has not been

transposed. In all three sectors considerable further work is also required to strengthen the

administrative capacity.

There have been notable developments with regard to regional policy, again the appropriate

structures will need to be developed to implement the national development plan and the

application of the NUTS-comparable legislation. In the social field, efforts have been limited

and legislative enforcement remains a matter of concern, in particular the capacity of labour

institutions.

Some progress has been achieved in justice and home affairs, most notably with regard to the

border guards and border management, for which an overall strategy has been developed. Its

implementation will require considerable effort and a high degree of co-ordination between the

agencies concerned. Efforts are being undertaken to improve the efficiency of the judiciary,

these will likewise need to be pursued with vigour. Alignment in some areas remains limited and

considerable improvement is required in law enforcement bodies dealing with the fight against

organised crime, in particular the police services. In the customs area alignment with the acquis

and the establishment of an effective implementation capacity both require significant additional

efforts as is the case for financial control.

Poland has made notable progress in aligning further its legislation but needs to do more in order

to be able to match this effort when adapting and strengthening the structures required with a

view to accession. This relates not just to the administrative capacity at the level of central and

regional government, although this is clearly primary, but also to the other actors; business

operators, NGOs and indeed the public at large, who are all involved in the implementation of

the acquis in the broadest sense. At the level of the civil service and public administration, it will

specifically entail a determined effort to increase the stability, independence, and efficiency of

Poland's administrative capacity as a whole.

This is reflected in the extent to which the short-term priorities of the accession partnership have

been addressed. There has been progress in meeting the acquis based elements, notably

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certification and state aids but continued efforts are needed to set up or strengthen capacities in

intellectual property protection, certification, state aids, agriculture and regional policy, the social

field, customs and justice and home affairs.

Poland has already started to address some of the medium-term Accession Partnership

priorities.”

3.1.

The chapters of the

acquis

As indicated, the review of Poland’s ability to assume the obligations of membership that is

below has been structured in accordance with the list of twenty-nine negotiating chapters.

Accordingly, this section opens with an assessment of progress related to the so-called “four

freedoms”, the cornerstones of the internal market, and continues with a systematic review of

progress on each of the chapters, to cover the

acquis

in all its various aspects, including

sectoral policies, economic and fiscal affairs, regional policy, environment, justice and home

affairs, external policies, and financial questions.

Chapter 1: Free movement of goods

Since the last Regular Report, Poland has made some progress in this domain.

In the area of

horizontal and procedural measures,

some further progress has been made

over the last year in the implementation of

New and Global Approach principles.

The Law on

Conformity Assessment entered into force in January 2001, establishing the legal framework for

the further adoption of a large part of the industrial products

acquis.

In terms of legislative

alignment, the most important achievement has been the adoption of the amendment to the 1993

Standardisation Act in October 2000 (entered into force in December 2000). This amendment

allows for the implementation of European standards through the so-called ‘cover-sheet

method’ (endorsement of European standards in one of the official languages of the European

standards organisations without translation into Polish). This, together with the adopted

“Programme of Standardisation Works for the years 2001-2003”, has speeded up the entire

process of standardisation. As of June 2001, the Polish Committee for Standardisation has

adopted 45% of the total amount of European standards (80% is the minimum to be admitted

as a member of the European standardisation organisations CEN and CENELEC). Last year

the figure was 30%. The Committee for European Integration adopted, in February 2001, the

‘Schedule for limiting the number of obligatory standards’ which indicates June 2002 as the end

date by which all standards will have gained a voluntary character. Regarding market

surveillance, in July 2001 the Committee for European Integration adopted a strategy on the

future organisation of market surveillance and appointed an interministerial working group that

will be responsible for its implementation. No particular developments can be reported

regarding the preparation for the application of the regulation on safety checks on external

borders, the regulation on free movement of goods between Member States ('strawberry'

regulation), the notification procedure and the interchange of data between administrations.

In July 2001, the Geological and Mining Law was adopted. This law will enter into force in

January 2002 and provides for the legal basis for the transposition of the New Approach

directive on equipment being used in explosive atmospheres (the ATEX directive) (not

transposed yet) and part of the machinery directive (transposed in July 2001).

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Some progress can be reported on the adoption of

sector specific legislation.

In the areas

covered by

New Approach Directives,

the Polish Committee for European Integration

approved a ‘Schedule of Implementation of New Approach Directives’ in March 2001. The

entry into force of these directives, once adopted, is foreseen for July 2002. As of July 2001

two directives (low voltage and machinery) have been transposed. The acquis on medical

devices was transposed in September 2001 by the adoption of the Law on Medical Products.

No legislative alignment has yet occurred regarding simple pressure vessels and pressure

equipment, gas appliances, lifts, toys, electromagnetic compatibility, radio and

telecommunications terminal equipment, personal protective equipment, explosives for civil uses

and recreational crafts.

Regarding legal metrology, the framework Law on Measures was adopted in May 2001.

Certain provisions of this law entered into force in July 2001, the remaining provisions will enter

into force in January 2003. On the basis of this law, specific Ordinances will be adopted

transposing the entire

acquis

on legal metrology, including the New Approach Directive on

non-automatic weighing instruments (not transposed yet). In September 2001, a Law on

packed goods transposing the EC acquis on pre-packaging was adopted. The major part of the

law will enter into force in January 2003, the remaining provisions upon accession.

The Construction Law was amended in September 2001, allowing for the transposition of the

New Approach construction products directive.

While there have been no developments regarding the transposition of the

acquis

on firearms

and the return of cultural goods, there has been progress in other areas falling under the old

approach

Progress can be noted regarding alignment in the field of motor vehicles. The Law on Road

Traffic was adopted and signed in September 2001. This law will enter into force as from

January 2002 onwards.

In the field of chemicals, the framework Act on Chemical Substances and Preparations was

adopted in January 2001. The major part of this law entered into force in February 2001. As

regards fertilisers, the law adopted last year entered into force in January 2001 and an executive

regulation was issued in May 2001. Legislation on drug precursors entered into force in

October 2000.

In the field of pharmaceuticals, the framework Law on Pharmaceuticals was adopted in

September 2001. This law will enter into force in January 2002, with exception of some

provisions which will come into force at the date of accession. With respect to data exclusivity,

this delayed entry into force will create serious difficulties in the short term. Several executive

regulations under this Law were adopted. In parallel, the Law on the Registration Office for

Medical, Medicinal and Biocidal Products and the Introductory Law on the Provisions

introducing the Pharmaceutical Law, the Law on Medical Products and the Law on the

Registration Office for Medical, Medicinal and Biocidal Products was adopted. A Law on

Prices, adopted in July 2001, grants the Minister of Health the statutory power to issue

secondary legislation laying down the rules for determining prices of pharmaceuticals in line with

the Community ‘transparency’ directive.

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The

acquis

on cosmetics was transposed by the adoption of the Law on Cosmetics in March

2001. It will enter into force 12 months from the date of its publication.

The EC directive on footwear was transposed by way of a Regulation of the Council of

Ministers in November 2000. It entered into force in June 2001.

As regards foodstuffs (see

also chapter 7 - Agriculture),

the Council of Ministers adopted in

April 2001 a document entitled ‘Information related to the legal and organisational aspects of

food safety’. This document presents the current situation with regard to the supervision of food

safety and the legislative changes necessary for the full co-ordination of control activities in the

area of food safety. It identifies the scope of the necessary action and contains proposals for,

inter alia,

the possible establishment of a separate branch of governmental administration

responsible for matters related to foodstuffs. The Law on the Health Conditions for Foodstuffs

and the Law on Materials and Articles intended to come into contact with foodstuffs, the main

framework laws in this domain, were adopted in June and September 2001 respectively. While

the first entered into force immediately, the latter will only enter into force in October 2002; on

the basis of these laws, a considerable part of the EC acquis on foodstuffs will be adopted as

implementing measures. The Law on Trade Quality of Agricultural Food Products was adopted

in December 2000. On the basis of this law, the specific vertical food Directives will be

transposed as implementing measures. The Plenipotentiary responsible for food safety matters

has been appointed by the government.

With regard to Poland’s administrative capacity for the implementation of horizontal and

procedural measures and sector specific legislation, there has been a gradual improvement

during the period under consideration.

The new Polish Accreditation Centre (PAC) became fully operational in January 2001. It has

taken over all accreditation activities from the Polish Centre for Testing and Certification

(PCBC) as well as those from the Central Office of Measures (personnel from both institutions

were transferred to the PAC). The organisation and financing system guarantee its

independence and impartiality.

The Polish Committee for Standardisation is still a government-controlled public institution (its

members are appointed and dismissed by the Prime Minister). Independence should be ensured

by the entry into force of the final amendment to the 1993 Standardisation Act, scheduled for

January 2003. It is important to note that the former amendment to this Law, adopted in

October 2001 and referred to above, has appointed the Polish Committee for Standardisation

as the National Enquiry Point to fulfil provisions of the Agreement on Technical Barriers to

Trade (TBT) of the World Trade Organisation (WTO).

The Polish Centre for Testing and Certification (PCBC), which will act in the future as a notified

body for several New Approach Directives, became a member of the European Organisation

for Testing and Certification (EOTC) in May 2001. It offers services in the area of regulatory

and voluntary product certification.

Regarding market surveillance, the strategy recently adopted points to the Office for

Competition and Consumer Protection (OCCP) as the main market surveillance authority. It

will co-operate with the Central Board of Customs, the Trade Inspection, the State Labour

Inspection and other inspection bodies.

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In the

non-harmonised sector,

a Law on Technical Supervision was adopted in December

2000 and entered into force in January 2001. The new provisions adopted as a result of the

transposition of New Approach Directives will gradually override the provisions of this law,

which will eventually apply mainly to the area not covered by European legislation. The

Ministerial Committee for European Integration adopted, in June 2001, ‘The Time Schedule for

the abolition of non-tariff restrictions in trade between Poland and the EU in 2001-2002,

together with impact assessment for such adjustments’.

There were two amendments to the Law on

Public Procurement

adopted by the Parliament in

June and July 2001. Their entry into force will be gradual. These amendments aim at further

aligning the legislation and procedures in this field. The administrative capacity in the field has

been strengthened but is more efficient at central than at regional/local level. In 2000, a

significant number of complaints and investigations were reported: 1565 complaints lodged by

December 2000 and 460 investigations initiated by the Public Procurement Office. 340

investigations were completed and 28 of those resulted in the notification of the violation of law

submitted by the Public Procurement Office to the competent bodies. A new review system is

expected to come into force in January 2002.

Overall assessment

The main framework legislation for the horizontal and procedural measures is in place (with the

one exception of a revised Standardisation Law which is still in preparation). As a result, the

emphasis shifted this year to the actual drafting of measures transposing the individual New

Approach directives. This process has gone more slowly than foreseen due to difficulties with

the legal drafting techniques which now seem to have been overcome. Further efforts will be

required to accelerate the transposition of legislation in the coming year.

Overall, most of the framework legislation has now been established (motor vehicles, chemicals,

pharmaceuticals, medical devices, equipment used in explosive atmospheres, construction

products, cosmetics, legal metrology, pre-packaging and foodstuffs,) or is expected to be

adopted in the very near future (explosives for civil uses). The emphasis should now be, firstly,

on the secondary legislation transposing the individual directives and secondly, on the actual

implementation of this new legislation. There is also considerable scope to increase the

awareness of economic operators and the broader public as to the forthcoming change in

approach.

As for administrative capacity in this domain, the Polish standardisation body (Polish Committee

for Standardisation) is in place and functions well (although its full independence remains an

issue). Efforts need to be pursued to speed up the adoption of European standards and to meet

the requirements to become a member of CEN and CENELEC. The Polish Accreditation

Body has become operational. Efforts are being undertaken to join European Accreditation and

to conclude Multilateral Agreements on Accreditation. Current efforts to develop a network of

conformity assessment bodies and laboratories will need to be continued.

Further efforts are also needed to strengthen the overall administrative capacity to implement the

acquis

on industrial products in the specific sectors. The Registration Office for the Medical,

Medicinal and Biocidal Products should be established, the activities of which cover all

pharmaceutical and biocidal products, as well as medical products. The Office for Chemical

Substances and Preparations should also be established. Particular attention will need to be

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paid to the administrative structures in the field of foodstuffs which should allow the preparation

of both the administration and the food operators and ensure the smooth deletion of the pre-

market approval of foodstuffs. This will imply a restructuring of the control bodies and the

streamlining of the network of control laboratories. The administrative structures in the field of

foodstuffs still need to be put in place. A document is under preparation which will identify the

organisations involved and define the structures of food control.

Further efforts are required in order to ensure that Poland possesses a well-functioning market

surveillance system with the appropriate implementing structures for all sectors.

In the non-harmonized area, efforts will need to be pursued in order to ensure that, by the time

of accession, all measures of equivalent effect will be lifted.

In the area of public procurement, the newly adopted legislation has not abolished the national

preference clause for public procurement: Community firms are, therefore, still denied access to

tender procedures in Poland on equal terms. The implementation of the amended law will

require detailed attention and the administrative capacity should still be strengthened, in

particular at regional/local level. The implementation of the Public Market Information System

(SIMAP) would represent an important step in aligning with EC systems.

Chapter 2: Free movement of persons

Some progress has taken place in aligning with Community provisions. Preparations for

complete alignment, as well as for the establishment of the required administrative structures,

have continued to take place.

In the area of

mutual recognition of professional qualifications,

some progress has been

made since the last Regular Report. On a horizontal level, the Act on the Recognition of

Qualifications for Regulated Professions acquired in EU Member States was adopted in May

2001 and enters into force upon accession. On a sector-specific level, an amendment to the Act

on the Professions of Nurse and Midwife was adopted and entered into force, with some

exceptions, in February 2001. The basic aim of this new Act is to introduce a system allowing

for the mutual recognition of the professional qualifications of nurses and midwives by defining

the minimum educational standards for the two professions and the curricula of nurses and

midwives schools. Secondary legislation under this Act was also issued in June and July 2001.

Further, an amendment to the Act on the Profession of Medical Doctor and to the Act on

Chambers of Physicians has been adopted in September 2001 granting EU nationals the right to

take up and pursue the profession of medical doctor in Poland. Its provisions will enter into

force gradually. Moreover, the Act on Professional Self-government of Architects, Construction

engineers and urban planners was adopted in December 2000. Its provisions have or will enter

into force gradually. Combined with the August 2001 Act amending the Construction Law, it

allows for the recognition of the professional qualifications of architects as provided for in the

EC acquis. Finally, in the field of veterinarians, an Act amending the Law on Veterinary

Surgeons Profession and the Veterinary Chambers and other acts was signed into law in

September 2001.

With respect to

citizens’ rights,

the Act amending the Aliens Act entered into force in July

2001 and will facilitate compliance with the

acquis

on residence rights.

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In the area of

free movement of workers

, preparations have continued to facilitate Poland’s

participation in European Employment Services (EURES). In July 2001, an amendment to the

Act on General Health Insurance and Certain Other Acts was adopted which entered into force

in September 2001. Thereby, foreigners residing in Poland on the basis of a residence permit

including a work permit, a permanent residence card or a temporary residence card are now

covered by health insurance under the same conditions as Polish citizens residing in Poland.

Development of institutional capacity in the field of

co-ordination of social security

systems

has accelerated. A bilateral agreement with Austria on social security (dating from 1998)

became effective as of December 2000, and a Convention between Poland and Luxembourg

on social security (dating from 1996) became effective as of February 2001. A new Convention

on social security was signed with the Netherlands in February 2001.

Overall assessment

Poland has achieved partial alignment with the

acquis

in this field. While recent progress has

improved the situation, considerable efforts are required both with respect to the adoption of

legislation and the necessary administrative capacity.

Further legislative work is necessary to achieve full alignment. In the field of mutual recognition,

outstanding issues relate in particular to alignment with EC legislation on lawyers, dentists and

pharmacists. With the recently adopted legislation and the framework legislation pending, the

emphasis should now be put on adopting the secondary legislation and ensuring that the

necessary steps are taken to put in place the appropriate administrative capacity. It will need to

be ensured that, by accession, there are no provisions in Polish legislation which contradict

Community rules, in particular with respect to nationality, residence or language requirements.

With respect to professional qualifications obtained before harmonisation, Poland should

introduce measures to ensure that all its professionals can, as of accession, meet the

requirements laid down by the directives.

In the field of citizen’s rights, legislation on entry into and residence of EU nationals in Poland

still needs to be adopted and the EC Directive on voting rights transposed. Serious efforts have

been undertaken concerning administrative capacity and such efforts should be maintained.

Efforts to prepare for alignment with the

acquis

on free movement of workers need to be

maintained. With regard to future participation in the EURES network, efforts should be

continued to strengthen public employment services, especially with regard to language training.

With regard to the future co-ordination of social security systems, Poland needs to continue the

development of sufficient administrative structures and the training of the necessary staff. The

conclusion of further bilateral social security agreements is also encouraged, in particular with

Member States to the extent that the latter rely on the same principles as the Community rules in

this field.

Chapter 3: Freedom to provide services

Poland has continued to make progress regarding financial services and in enhancing

administrative capacity.

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In the field of

the right of establishment and the freedom to provide

services (other than

financial services) there has been a number of legislative and administrative developments since

last year, with the adoption of a number of laws which on implementation will ease access to the

service sector. In November 2000, amendments to the Law on Protection of Persons and

Property were adopted. These enter into force on the day of accession and will allow for

obtaining a

bodyguard

licence or a licence to conduct activities for persons other that Polish

citizens. In the field of

tourism,

amendments which entered into force in January 2001 to a

number of laws, including the Law on higher education, the Law on higher vocational schools,

and the Law on tourism services, have sought to align Polish legislation in this field, notably with

regard to training. In August 2000, the Minister of National Education also issued an ordinance

on documenting the knowledge of foreign languages of tourist and excursion guides.

The implementation in December 2000 of the amendments to the civil code have granted further

rights to

Commercial agents

in line with the

acquis.

The ordinance on court experts and

sworn translators adopted in December 2000 will come into force on the day of accession.

The

distribution

of chemicals will be regulated by the law on chemical substances and

concoctions adopted in January 2001. Some provisions came into force in April 2001 and the

law will come fully into force in January 2003.

In the field of

financial services,

with regard to the

banking sector,

the amendment of the

banking law took place in September 2001. The main objective of the amendment is to bring

Polish banking law more closely in line with the

acquis

relating to credit institutions. To this end,

the amendment introduces changes to the existing rules (e.g., supervision of the owners of

banks) and covers areas not included to date by the banking law (activity and supervision of

Polish banks in the EU and of EU banks in Poland, information requirements, cross-border

payments, consolidated supervision and netting). The amendments also cover electronic

money. The law further regulates the principles of consumer credit agreements. The Law on

mortgage bonds and mortgage banks adopted in January will also come into force on the day of

accession.

The new Law on

co-operative banks,

came into force in January. It gives the co-operative

banks the possibility of joining directly the group of the “Bank for Food Economy” (BZG), or of

remaining affiliated to regional associations. In so doing the law gives the co-operatives the

possibility to calculate their capital on a common basis with BZG with a view to fulfilling the

solvency requirements required for banking supervision purposes. One unforeseen result of the

legislation has been the grouping together of six of the regional associations. It remains to be

seen if such groupings will enhance the performance of a sector which, in comparison to

commercial banks, is fragmented and under-performing.

The financing of the office of the Insurance ombudsman is now regulated by the Ordinance of

the Minister of Justice. The methods of calculation of payments by insurance companies to

cover the costs of insurance supervision and brokerage activities and the costs of the operation

of the Insurance Ombudsman was thereby amended. This Ordinance entered into force in

December 2000.

In the area of

securities,

amendments to the following laws were adopted in December 2000:

the Law on execution of proceedings, the Law on taxes and local charges, the Law on

payments granted on interest for certain bank credits, the Law on public trading in securities, the

Tax Ordinance, the Law on public finances, the Law on income tax on legal persons and the

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Law on the commercialisation and privatisation of State-owned enterprises. These amendments

entered into force in January 2001. In the case of the act on Public Trading of Securities certain

provisions, notably the "European passport", will come into force on the day of accession.

Amendments to the Act on Investment Funds and Act on Bonds were introduced in November

2000 with a view to further alignment with the

acquis.

Concerning the

protection of personal data and the free movement of such data

and

information society directives,

the Law on Databases was adopted in September 2001.

Overall assessment

Poland' s level of alignment with the acquis varies between financial services on the one hand

and other services on the other. The level of alignment with regard to financial services in

particular is now quite high. Further work has been undertaken towards strengthening the

supervisory structures described in detail in the 2000 Regular Report. Nevertheless, given the

nature of the sector, close monitoring of such structures is the norm and Polish authorities will

need to be ready to correct possible shortcomings in transposition or practical supervisory

arrangements which may come to light.

Considerable efforts are required to bring about an improvement in the capacity to supervise the

non-financial services and to ensure that the necessary legislative alignment takes place. A

number of existing restrictions remain, notably with regard to gambling and bodyguards. Recent

legislative developments will not enter into force until the date of accession and as a

consequence these issues remain unresolved. Elsewhere the current ban on alcohol advertising

is undergoing close scrutiny to assess its compatibility with the acquis.

According to the law on the National Bank of Poland (in force as of January 1998), the

Commission of Banking Supervision is entrusted with the responsibility of supervising the

banking institutions. The Commission is chaired by the NBP President and composed of the

deputy minister of finance, a representative of the President, the Commission of Securities and

Exchanges, the Bank Guarantee Fund and the General Inspectorate of Banking Supervision.

The tasks of the Committee are

i.a.

the establishment of security norms for banks and

supervision of compliance with laws and norms by banks. The General Inspectorate of Banking

Supervision (GINB) is an executive body of the Commission of Banking Supervision. GINB is

an autonomous unit of the National Bank of Poland. It is composed of around 500 staff, of

whom 320 work on on-site examinations. The GINB has continued to be perceived as an

efficient and well-organised institution.

The Law on the bank guarantee requires further modification to align it with the EC Directive on

deposit guarantee schemes.

The insurance sector is supervised by the State Office for Insurance Supervision (PUNU),

acting under the Insurance Law. The main task of this body is to protect the interests of insured

persons. Particular functions of PUNU are the monitoring and audit of insurance, and the

licensing and monitoring of insurance brokers.

PUNU also takes part in the activity of the Insurance Guarantee Fund (made up of

contributions from insurers), especially in cases where the resources of the Fund are used to

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cover claims against a bankrupt insurer. Another task carried out by PUNU is co-operation

with the Ministry of Finance in drafting legislation and issuing licenses for new insurers.

Efforts had been undertaken to adopt further legislation in the field of insurance but these did not

pass all stages of the legislative process. One consequence is that the intended reorganisation of

insurance supervision has not taken place.

The pension fund sector is supervised by the Pension Funds Supervision Office (UNFE),

established in 1998. The basic purpose of UNFE is to protect the interests of all members of

open pension funds (2nd pillar of social security system in Poland) and participants of employee

pension programmes (3rd pillar). UNFE supervises the activity of pension funds and pension

companies as well as employee pension programs. UNFE is responsible for conducting

licensing procedures. The additional purpose of the office is to enhance public awareness about

pension funds and pension programmes, in particular concerning the rights appertaining to the

funds' members and programmes' participants.

The Securities and Exchanges Commission (SEC) was established in 1991 and is a

governmental agency in charge of supervision of public trading of securities. In 1998, its

responsibilities were broadened and now also cover commodity exchanges. The Commission is

composed of its chairman (nominated by the Prime Minister), 2 deputies and 6 representatives

of ministries. On top of this, the office of the Securities Commission employs 144 persons in 8

departments. Within the reporting period, the Commission met 27 times and issued 901

resolutions. The responsibilities of the Commission are the following: the supervision of fair trade

and competition in securities markets, including equal access to information, protection of

investors, the licensing and supervision of companies traded on public markets (265, of which

45 were authorised in 2000), the licensing and supervision of brokerage houses and banks

conducting brokerage activity (49), as well as investment and trust funds (85), and educating the

general public about securities markets.

The SEC is upgrading its programme in order to further increase the efficiency of this body.

Chapter 4: Free movement of capital

There has been some progress made in the reporting period, notably regarding measures to

counteract money laundering.

With regard to

capital movement and payments,

there have been some legislative

developments as a result of legislation linked to investment and securities

(chapter three -

Freedom to provide services).

In February the amendment to the law on

purchase of real estate

by foreigners was adopted.

This is intended to bring Polish law in line with the obligations set out in the Europe Agreement.

The law is not applicable to cases of purchase of natural resources, land and forest.

Significant progress has been made with regard to the adoption in December of legislation on

money laundering.

The law provides for the establishment of a Financial Information Unit

overseen by the “General Inspector of Financial Information” (GIFI). The General Inspector is

under-secretary of state in the Ministry of Finance, although the unit is separate from the

structure of the Ministry of Finance.

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The law requires financial institutions to register all transactions exceeding 10 000 EUR. These

institutions, as well as all government bodies (e.g. fiscal control bodies, tax and customs offices,

and prosecutors offices), are obliged to inform the General Inspector about all circumstances

suggesting the possibility of money laundering. The General Inspector and his staff are

authorised to suspend, for a maximum period of 48 hours, any suspicious transaction, to inform

the local prosecutor about their suspicion that the law has been violated and to pass on to him

the relevant documentation. The prosecutor has a right to stop the transaction, if he considers

that it is against the law. Institutions are required to establish internal procedures aimed at

counteracting the introduction of illegal financial assets, appoint persons responsible for fulfilling

duties described in the law and train their staff.

The elements of the legislation relating to organisational issues came into force in January 2001.

The General Inspector was nominated in February and he will be assisted in his functions by the

Department of Financial Information in the Ministry of Finance. By June, the department was

staffed with 20 persons divided into 5 sections.

The remainder of the law was due to be implemented in June. Last minute amendments by the

parliament have seen the registration of cash transactions above EUR 10 000 postponed until

April 2002, and of all other transactions until April 2003, on the grounds that both GIFI and the

financial institutions are not technically ready to provide and process all the required information.

Overall assessment

As was noted in the 2000 report, the overall level of alignment with the

acquis

in this area is

high.

This has in particular been further reinforced by the adoption of legislation with regard to money

laundering. Compliance with the recommendations of the Financial Action Task force should be

ensured.

The last report also indicated that substantial restrictions remain in place, in particular on direct

investments from foreign entities in specific economic sectors, real estate acquisitions and short-

term transactions. In the case of real estate transactions, legislation has been adopted which

may attenuate the situation. It is noteworthy that legislation on gambling adopted in November

2000 has not addressed the concerns raised in the last Report with regard to Poland’s Europe

Agreement obligations. In the area of short term capital movements, the situation remains as

described in the last Regular Report, with no progress towards further liberalisation.

Investments by Polish occupational pension funds in foreign assets are still severely restricted.

With regard to payment systems, further progress is required in completing the transposition of

the acquis and establishing out of court redress procedures for the settlement of disputes

between banks and customers on cross-border transfers.

Chapter 5: Company law

Since last year’s Regular Report, Poland has made further progress with regard to company

law and the protection of intellectual and industrial property rights.

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Regarding

company law

as such, the Commercial Companies Code of September 2000 and

the amendment to the Act on the National Court Register of November 2000 entered into force

on 1 January 2001. Together with secondary legislation adopted in the course of last year,

legislative alignment has been completed in this field. The National Court Register started

operating in January 2001. In its first 5 months of operating, 13 250 entities were made in the

In November 2000 a comprehensive amendment to the Law on

accountancy

was adopted

(enters into force January 2002), introducing important changes to the accountancy law of

1995. These fill legislative gaps in such areas as mergers and acquisitions, financial instruments,

leasing and long-term contracts, and establish principles of consolidation for financial reports.

The law also addresses the issue of transparency of financial reports.

In the field of

intellectual property rights,

no new legislation was adopted in the course of last

year. The Law on the protection of databases was adopted in September 2001 On the basis of

last year's amended Law on Copyright and Neighbouring Rights, an interministerial team was

set up in November to counteract infringement of copyright and neighbouring rights.

In the field of

industrial property rights,

Article 322 (relating to the issue of transfer of the

right to trademarks) was, for constitutional reasons, deleted from the June 2000 Industrial

Property Law. Thus modified, the law entered into force in August 2001. The Law provides for

further alignment with the

acquis

in this field, but further legislative efforts are still necessary. In

April 2001, the Parliament adopted the Act on Patent Attorneys, rendering the status of the

profession of patent attorney compatible with the principles of the Industrial Property Law. In

the light of the entry into force of the new Industrial Property Law, restructuring of the Patent

Office has been initiated and its computerisation has continued.

Overall assessment

Poland has, to a large extent, achieved alignment with the

acquis

in the area of company law

and accounting law, and transposition in the field of industrial and intellectual property rights is

continuing at a steady pace. Further amendments to the Polish copyright law are required in

view of the Directive on copyright in the information society and the resale right directive.

The administrative institution responsible for implementation of

company law

is the National

Court Register, which started operating in January 2001. It consists of one central unit and

several regional units set up at the regional courts to keep the registers. The regional units have

access to and provide the input for the central database. The register is open to the public and

all entries are published in the Court and Economic Monitor, unless the law provides otherwise.

Human and financial resources need to be increased and training for judges and administrative

staff of the National Court Register needs to be intensified.

Work on the Regulation replacing the Brussels Convention and on the Rome Convention on the

law applicable to contractual obligations is at an advanced stage and needs to be continued.

In the field of

intellectual property rights,

last year's amended Law on Copyright and

Neighbouring Rights needs further adjustment concerning collective management societies. The

creation of the interministerial team to counteract the infringement of copyright and related rights

allows for coordinated actions. The Copyright and Neighbouring Rights Division situated in the

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Legal department of the Ministry of Culture and National Heritage employs 6 persons, of whom

4 are lawyers. Further strengthening of administrative capacity should be encouraged.

In the field of

industrial property rights,

the Law on Industrial Property rights still needs

further amending to introduce the legal protection of biotechnological inventions and industrial

designs and to align with the amended Convention on European Patents. Patent protection for

pharmaceutical products has been established in Poland since 1993. Legislation introducing

Supplementary Protection Certificates has not yet been drafted. Restructuring efforts, training

and modernisation of the information system within Poland’s Patent Office should continue to

receive attention. Further efforts are required to ensure efficient enforcement of IPR legislation,

in particular as regards the fight against piracy and counterfeiting. In this respect, training is

taking place for enforcement bodies (Customs, police and the Judiciary) on EC legislation

and/or enforcement methods and should be intensified. Better co-ordination among enforcement

bodies needs to be ensured.

Chapter 6: Competition policy

Since last year’s Regular Report, Poland has made significant progress in the adoption of new

legislation aligning the legal framework with the EU

acquis,

notably in the field of state aid. This

progress, as far as the State aid control is concerned, has not been reflected in the development

of a strong enforcement record.

In the field of

anti-trust,

on the legislative side, the new Act on Competition and Consumer

Protection entered into force in April 2001. This new legislation will enable the Council of

Ministers to issue block exemptions and to introduce exemptions related to agreements of minor

importance (de

minimis).

The Competition Act also includes an increase in notification

thresholds in merger cases (now €50 million), thereby improving the old control system that

resulted in a large number of mostly unnecessary merger notifications. The new legislation also

develops procedural rules, and gives an independent status to the competition authority in

Poland. Two regulations developing the Law were adopted concerning the calculation of

turnover of enterprises and administrative fees.

The

Office of Competition and Consumer Protection (OCCP)

is the national competition

authority in Poland. It is composed of the Head Office in Warsaw and nine regional branch

offices and has an overall staff of 222 persons. Poland's enforcement record for 2000 consisted

of 297 decisions in the antitrust area (16 on restrictive agreements, 279 on abuse cases and 2

others). In 57 antimonopoly proceedings, the OCCP imposed fines. The highest fine,

amounting to 55 million PLN (€ 14.8 million), was imposed on Polish Telecom. The OCCP has

also taken 701 decisions in the area of merger control.

In the field of

state aid,

important legislative progress has been achieved. The framework

legislation on State aid control (Law on conditions for admissibility and supervising of state aid

for entrepreneurs) entered into force in January 2001. As regards secondary legislation, 14

ordinances of the Council of Ministers on granting State aid were issued and entered into force

in April and May 2001. These included

inter alia

detailed rules for the control of sector

specific aid, regional aid as well as horizontal aid, and enable the Polish Office for Competition

and Consumer Protection (OCCP) to assess notified aid projects in conformity with the acquis.

The OCCP adopted during the reporting period the "Report on the state aid in Poland granted

to entrepreneurs in 1999", which for the first time contained data concerning public aid granted

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by municipalities. Poland also presented the "Inventory of state aid in Poland granted in 1998

and 1999" but the comprehensiveness of this document needs to be further improved.

In January 2001, the amendment to the Law on Special Economic Zones (SEZ) entered into

force aimed at bringing the fiscal aid granted in the Zones into line with the

acquis.

The new

Law ended the possibility of allowing operating aid, export aid and the accelerated depreciation

of fixed assets. It also subjected the fiscal aid granted through the Special Economic Zones to

the general principles of the State Aid Law, notably by introducing aid ceilings and specific

norms for granting licences for conducting activities in sensitive sectors. In March 2001, the

Council of Ministers amended 15 regulations establishing the various SEZs, adapting them to

the new legal framework. This flurry of legal alignment has not resolved the issue of existing tax

benefits granted in the SEZs which has not been brought into line with Poland's pre-existing

obligations under the Europe agreement.

In November 2000 the State Aid Team established in the OCCP was transformed into the

Department of State Aid.

The staff of the Department was substantially increased and, since

January 2001, it now has 20 members organised in two Divisions: the Division of Sectoral Aid

and Accountancy and the Regional and Horizontal Aid Division. The enforcement record in the

field of State aid has started to develop gradually. Up until mid September 2001, the OCCP

adopted 28 decisions on aid applications and issued four negative opinions.

Overall assessment

Poland has adapted its basic legislation to contain the basic principles of both anti-trust and

state aid. The performance with regard to establishing a credible record of enforcement is

rather more variable.

In the area of anti-trust, Poland’s legislation contains the basic principles of Community anti-

trust rules, concerning restrictive agreements, abuse of dominant position and merger control.

The adoption by Poland of Community block exemptions is now opportune in line with the

Community's new policies on vertical restraints. The OCCP appears to have a reasonably

extensive enforcement record, but it would be useful to establish a more deterrent and effective

fining policy. Priority should be given to cases that concern the most serious distortions of

competition.

With regard to state aids, the State Aid Law and the secondary legislation appears to provide a

satisfactory basis for initiating effective control of State aid in Poland. In order to ensure

maximum aid intensities in assisted areas, Poland has proposed a regional aid map for joint

adoption. The enforcement record is emerging, but more decisions and/or opinions are required

by the OCCP to establish a proper enforcement record. In this area, the most important

challenge is now to ensure effective control of all aid measures. This applies not only to the fiscal

aid granted through aid the SEZs but also to aid in the sensitive sectors, for example, the steel

and the motor vehicle sectors. Concerning the steel sector, restructuring into viability will be

necessary to ensure enforcement of the state aid rules.

As concerns administrative capacity, the Office for Competition and Consumer Protection is an

independent authority and has reasonably sufficient resources and expertise in place. The new

State Aid Department set up following the adoption of the State Aid Control Law, has been

granted additional resources and appears to be functioning well. The real test of its capacity will

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come as it strives to develop a good record on enforcement. In this context, it is essential that

investments in institution building should continue, notably in training (including the judiciary) and

IT facilities.

Chapter 7: Agriculture

In 2000, for the second consecutive year, a decline in agricultural production, both plant and

animal, was noted. Agriculture (including hunting, forestry and fishing) in Poland accounted for

3.3% of Gross Value Added in 2000, compared to 4% in 1999

. Employment in agriculture

remained constant, accounting for 18.8% of total employment

Crop production continued to decline, with a 9.7% decrease for cereals,- primarily due to

lower yields resulting from unfavourable weather conditions - and by 25 % for oilseeds - due

to a reduced crop area. For animal production, the situation differed between sectors. Milk

production decreased slightly by 3.5% due to a fall in the number of dairy cows which was not

compensated for by the limited increase in milk yield per cow. The meat sector also showed a

decrease in production with the sharpest fall being 7% for pig meat. The exception to the trend

was eggs and poultry, which experienced a small increase of 1.2%.

According to the Ministry of Agriculture

, the overall situation with regard to agricultural income

improved in 2000 compared to 1999 as a result of higher profitability due to higher products

prices and lower input prices. The share of market production in total agricultural production

thus increased to over 60%

. However, the economic situation remains difficult for the farming

population, in particular for those holdings affected by natural disasters, in particular drought

and flooding which caused significant crop losses in many regions.

In 2000, EC imports of agricultural products originating in Poland increased by 13 % to €

1226.6 million. EC exports to Poland increased by 18 % to € 1904 million. The trade balance

in favour of the Community amounted to € 677.8 million compared to € 535.0 million in 1999

The main EC imports from Poland are fruit, preparations of vegetables and fruit, and meat. The

main EC exports to Poland are fruit, prepared feed, miscellaneous preparations and cereals

which increased threefold, as a consequence of bad climatic conditions. New reciprocal

concessions for agricultural products were concluded between the EC and Poland in

September 2000 and have been implemented as from 1 January 2001. (see

section A.b. –

Relations between the European Union and Poland).

At the policy level, Poland continues to pursue the line of action indicated in the “Medium-term

Strategy for Agriculture and Rural Areas Development “adopted in April 1998 and in the

"Coherent structural development policy for rural areas and agriculture" adopted in July 1999.

The “ Pact for agriculture and rural areas” was adopted by the Council of Ministers on

September 2000. Thus the policy instruments remain much the same as in previous years, with

interest rate subsidies, loans, credit guarantees and warranties, intervention on the agricultural

The source for all agricultural statistics is EUROSTAT unless otherwise specified.

In Labour Force Survey definitions (LFS).: Agricultural employment is defined in LFS terms as economically active

persons who gain a significant part of their income from agriculture.

Polish Ministry of Agriculture “Progress in economic situation in agriculture and agri-business” 27 March 2001.

Uruguay Round definition of agricultural products, figures taken from EUROSTAT COMEXT (see U.E. 12/15:

Commerce des Produits Agricoles 1988-2000, 1 Partie D.G. AGRI/A.2 Analyses quantitatives, préventions, statistiques,

études, 2001, p. 10-57 et 86-89).

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markets for some basic products as cereals, skimmed milk powder and other subsidies. Some

new agricultural policy instruments have been introduced or are being developed, such as new

credit lines with interest subsidies (fisheries, meat industry) as well as loans for students,

vouchers for the purchase of fuel, crop insurance and structural pensions in agriculture. The

implementation of the main components of the Rural Development Programme, e.g.

infrastructure and human resource development, has been launched. VAT on agricultural

products was introduced in September 2000.

In 2001, the agricultural budget increased by 23.6% to € 1.1 billion (4.36 billion PLN) (without

appropriations for co-financing of PHARE and SAPARD programmes). To this has to be

added € 3.9 billion (15.76 billion PLN) for the Farmers' social insurance scheme (KRUS).

Around 40% of the agricultural budget (€ 456 million (1.76 billion PLN)) has been allocated to

the Agency for the Restructuring and Modernisation of Agriculture for investments and rural

development measures, representing an increase in its budget of 53%, and 14% (€ 163.7

million (633 million PLN), -13%) to the Agricultural Market Agency, for market-related

measures.

Concerning the land market, the Agricultural Property Agency continues to manage state-

owned land and agricultural property. APA’s current stock, 3.5 million ha., is mainly leased. It

is worth noting a strong concentration amongst leaseholders, with properties over 100 ha

corresponding to 76% of the leased area. As far as land purchase is concerned, restrictions on

foreigners remain.

Horizontal issues

With regard to the implementation of measures related to the

European Agricultural

Guidance and Guarantee Fund (EAGGF),

Poland has made some progress since last year’s

Regular Report.

In the last year, preparation of the two main institutions designated for the management of

measures related to the European Agricultural Guidance and Guarantee Fund (EAGGF) has

continued. The Law of 16 February 2001

, entered into force in April 2001, and confirms the

role of the two paying agencies, ARMA (the Agency for Restructuring and Modernisation of

Agriculture) and AMA (the Agricultural Market Agency), and provides the legal basis for

further adjustment. Both agencies have up-graded their administrative capacity by recruiting

additional staff and increasing training. Whereas ARMA has focussed on its preparation to

become accredited as the SAPARD pre-accession fund paying agency (

see section A.b. –

Relations between the European Union and Poland)

as well as in developing IACS, AMA's

preparatory work has concentrated on trade mechanisms, private storage aid, cereals

intervention and milk quota management. The "Strategy for the preparation of AMA for the

integration with the EU" schedules the start of the accreditation process for mid-2002.

With regard to the preparations to establish the Integrated Administration and Control System

(IACS) in Poland, the Law of February 2001 confirms ARMA's responsibility for the

implementation and management of IACS. Purchases of equipment, staff recruitment and

Amending the Law on Sanitary Inspection, the Law establishing the Agricultural Market Agency, the Law establishing

the Agency for Restructuring and Modernisation of Agriculture, the - Customs Code Law , the Law on eradication of

infectious diseases, examination of slaughter animals and meat and Veterinary Inspection and the Law on the

administration of foreign trade in goods and services and of special trade.

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training have continued at the central level and in the two regions where the implementation of

IACS has started at a pilot project level. The adoption of the Law of 25 July 2001 “ on the

national registration system of farms and farms animals and on amending certain laws” signed by

the President on 27 September 2001 represents significant progress in legislative preparation.

This law authorises ARMA to establish and operate the state system of farm and farm animal

registration, defines the legal framework for the system of animal identification and registrations.

Furthermore, the Veterinary Act, which forms an essential legal basis for the implementation of

animal identification and registration system was also signed by the Polish President in

September 2001. However, in spite of the legislation developments, significant concerns remain

on progress towards the practical implementation of IACS.

Concerning the implementation of

trade mechanisms,

the relevant act came into force in April

2001, and the Agency of Agricultural Markets (AMA) is in charge of issuing import and export

licenses within quotas and tariff ceilings, and automatic and non-automatic registering of data on

trade in agri-food products. For these tasks a Foreign Trade Administration Section has been

created within the Agency. Rules for the implementation of foreign trade mechanisms have been

developed for cereals, milk and milk products, meat and sugar.

The Law on organic farming, implementing Community rules for the production, control,

certification, marketing and labelling of organic produce, was adopted in March 2001 and will

enter into force in autumn 2001. It provides the basis for the establishment of an appropriate

registration and certification and inspection system for organic production, processing and

imports according to EC requirements, based on both state and private certifying units. Tasks

have been clearly attributed. Efforts to make the registration and inspection bodies operational

are being pursued. Subsidies for organic farming were continued in 2000.

Concerning preparations for Poland’s participation in the

Farm Accountancy Data Network,

pilot implementation of the Polish FADN has continued in several regions. The framework for

the organisation and methodology of FADN implementation has been developed. An

information campaign is being carried out in order to prepare farmers to join the FADN. The

legal basis for the implementation of the FADN and for the setting-up of the necessary

institutional framework was approved by the end of 2000.

Common Market Organisations

Poland has made some progress in legal harmonisation with regard to common market

organisation but there remains much to be done to implement these legal provisions.

As regards market and price monitoring, the law of March 2001 on agricultural market

research/surveys establishes the Integrated information system for agricultural markets and will

enter in force from the start of January 2002. It lays down the rules for the regular market and

price monitoring necessary in the framework of the Common Market Organisations and

commits market operators to providing such information. Regarding marketing standards, the

Law of December 2000 on commercial/marketing quality of agro-food products provides the

legal basis for the establishment of the Inspectorate of Trade Quality of Agri-Food Products,

which will become the main institution for quality control according to EU requirements. The law

lays down marketing standards and arrangements for their supervision, including post-slaughter

classification of beef and sheep and rules for price and productions reporting.

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Community rules in the framework of the Common Market Organisation have been transposed

for fresh fruit and vegetables, hops, tobacco and dried fodder (Law of November 2000,

entered into force in July 2001). The law on the organisation of the sugar market of July 2001

transposes most of the basic mechanisms of the CMO for sugar, including the quota system for

white sugar and isoglucose, and adjusts the market mechanisms already in place. The law on the

regulation of the market of milk and milk products, adopted in September 2001, introduces

amongst other basic mechanisms for the milk sector the legal basis for the specific reference

quantity for milk. Two aid schemes, private storage aid for butter and for longlife cheese, were

introduced in April 2001. With regard to milk quota administration, the implementation of a pilot

project for the "development of a milk quota system" - managed by the AMA - has continued

at regional level and has been extended to cover direct sales. Its results should lead to

recommendations for the nation-wide implementation of a milk quota management system. As

concerns wine and spirits, the tasks concerning the control of marketing standards for wine and

spirits have been assigned to the new Inspectorate of Trade quality of Agri-Food products.

The law on production and bottling of wine and wine products and their marketing was adopted

in July 2001.

Rural development and forestry

The main efforts of the Polish administration with regard to rural development issues were

focused around the establishment and accreditation of a paying agency for SAPARD. The Law

of February 2001 amends (amongst others) the Law on the establishment of ARMA and thus

enables ARMA to implement Community rural development programmes before and after

accession. The Ordinance of December 2000 (entered into force in January 2001) on the

granting of statutes to the ARMA tailors the organisational structure to the tasks of an

implementing and paying agency, as required in the framework of SAPARD, including the 16

regional ARMA offices.The Law of April 2001 on structural pensions in agriculture lays down

the legal basis for the implementation of an early retirement scheme in line with Community

requirements. The law will enter into force in January 2002.

Veterinary and phytosanitary issues, including food safety

Since last year’s Regular Report substantial legislative progress has been accomplished in the

veterinary field, due to the adoption of the Veterinary Framework Law in September 2001.

Transposition of veterinary acquis based on this law is still required.

Implementation of the veterinary act aims, by the date of accession, to bring into line with the

acquis veterinary checks at all polish border inspection posts.

Another key legislative act is the Law of December 2000 on marketing quality of agricultural

and food products, which will enter into force in January 2002. According to the Ministry, the

Law ensures full conformity with the EC law. The law

inter alia

regulates the supervision of

quality, inspection institutions, quality standards, including post-slaughter qualification of beef

and mutton carcasses, and information on prices, size and structure of production.

At the end of 2000, the Polish Government adopted a development strategy for the

restructuring of the meat and dairy industries. This strategy indicates that “animal slaughter and

production of processed meat are characterised by low production concentration and low

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specialisation". According to Veterinary Inspectorate data, 4,139 establishments were operating

in this sector in 1999.

As far as animal products are concerned, programmes governed by the relevant acquis are well

implemented for all residues, with the notable exception of growth factors.

With regard to administrative capacity in the veterinary field, the National Competent Authority

is the Veterinary Inspectorate, together with the competent department of the Ministry of

Agriculture. Regional Veterinary inspectors are under the administrative supervision of the

regional authorities, the Voivods or State representatives. As a result, some difficulties have

emerged in the capacity to enforce the legislation regarding contingency plans, animal health,

animal welfare and public health.

From October 2001 a new surveillance programme for TSE-testing in compliance with EC

rules has been introduced. In the context of the Geographical BSE Risk Assessment, Poland

has been classified in group III.

In the

phytosanitary sector,

some progress has been made since last year’s Regular Report in

the transposition of the community

acquis.

The Law on protection of crop plants was adopted

in February 2001 and entered in force in July 2001. Implementing provisions for this Law have

been prepared, but some of the regulations will only enter in force on 1 January 2003. The law

on Forestry propagating material was adopted and signed by the President in June 2001.

Concerning the organisation of the Plant Protection Inspection Service, the Main Inspector is

responsible for plant protection policy, measures and diagnostics. The General Inspectorate is

responsible for production requirements, manuals and procedures in the field of Plant protection

and supervises execution in the Voivodships. This includes diagnostics activities. The central

laboratory is a part of the General Inspectorate and has a range of different tasks including

development of methods and diagnosis of quarantine organisms to confirm diagnoses at

Voivodship level.

The Voivodship level is responsible for execution of inspections, phytosanitary measures and

diagnostics.

The Ministry of Agriculture finances the activities of the Main Inspectorate (national level), while

the activities in the Voivodships are financed by the Voivodship administration (indirectly from

the Ministry of Finance). In case of a phytosanitary crisis, the Ministry of Agriculture is able to

provide an emergency budget for disease control. The principles of Good Laboratory Practice

have been implemented in the above-mentioned system. The diagnostic methodologies have

been based on the procedures published by EPPO.

Poland will be covered by 16 Voivodship Inspectorates, 1 Central Laboratory and 16 Regional

Laboratories.

As regards

food safety

(see

also chapter 1 - Free movement of goods)

the Council of

Ministers adopted, in April 2001, a document entitled “Information related to the legal and

organisation aspects of food safety”. There are plans to reorganise the food supervision bodies

although no formal decision has been taken yet except the designation of the Plenipotentiary

responsible for food safety matters.

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Overall assessment

Overall, the preparations for the implementation of the Common Agricultural Policy have been

reinforced, in particular with regard to legal adjustments. A significant number of laws relevant

to agriculture has been adopted. Partly, they confirm basic decisions on the institutional

framework and provide the basis for the necessary adjustments of procedures and

administrative capacity in the institutions concerned. Partly, they transpose Community rules and

mechanisms defined by the agricultural

acquis.

Efforts for the practical implementation of a

number of mechanisms of the Common Agricultural Policy have been launched and a series of

concepts for the implementation of Common Agricultural Policy mechanisms has been

developed. However, the level of preparedness as well as actual implementation and

enforcement of Community mechanisms in the field of agriculture remains low in general, in

particular with regard to some key instruments such as the Integrated Administration and

Control System. Significant efforts are required to address these deficiencies in order to ensure

effective application of the Common Agricultural Policy after accession.

As regards

horizontal issues,

there has been no major change in Poland’s agricultural policy.

The status of ARMA and AMA as future paying agencies and main institutions for the

management of the CAP has been confirmed, and their administrative capacity has been further

prepared. For both institutions, including their regional offices, as well as for the Ministry of

Agriculture and Rural Development, efforts to prepare for the practical enforcement of the CAP

mechanisms have to be stepped up and the increase in both financial and human resources will

have to be continued. Co-ordination between both bodies, ARMA and AMA has to be

assured.

The implementation of the Integrated Administration and Control System (IACS) has started

later than anticipated, and still faces considerable obstacles. The adoption of the Veterinary Act

is a first step towards implementing the system. Key decisions still need to be taken, including

the methods for the Land Parcel Identification System and the Integrated Control System. A

detailed strategy for the implementation of IACS across the whole territory of Poland remains

to be developed, including the appropriate financial and human resources. Basic elements such

as the animal identification and registration system or the land parcel identification system are

not sufficiently developed. To sum up, setting up IACS in time for accession remains a

challenge, in terms of human and financial resources and in terms of practical implementation.

For the participation in the farm Accountancy Data Network, the necessary legal basis has been

approved. Although practical implementation is advancing through pilot projects, further efforts

for full conformity and nation-wide application are necessary.

With regard to

Common Market Organisations

, progress has mainly been in the form of

legal harmonisation, in particular for sugar and other specialised crops like fruit and vegetables.

Progress in practical implementation and enforcement is limited. Preparations have advanced for

some of the mechanisms, which are common to most of the CMO, notably in the areas of

foreign trade, market- and price-monitoring. The institutional adjustment for the monitoring and

control of marketing standards has been prepared, and further adjustments in marketing

standards, in particular with regard to carcass classification, appear to be necessary. It is hoped

that the financial assistance introduced for producer organisations will provide sufficient

incentives for their establishment. Much remains to be done, in particular with regard to the

operation of supply-management instruments. A key challenge in this context is the preparation

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for the implementation of the milk-quota management system upon accession, which is still at a

very early stage.

In the field of

rural development and forestry,

activities have concentrated on preparations

for the implementation of the SAPARD programme. This is confirmed by the accelerated pace

for accreditation of the SAPARD agency. Preparatory work for the implementation of agri-

environmental and afforestation measures has continued, though efforts for the definition of good

agricultural practice need reinforcement. The legal basis has been laid down for the early-

retirement scheme, one of the principal rural development measures that may be implemented

after accession in the framework of rural development programmes. However, no progress

could be identified in the classification of less favoured areas. One of the key challenges to be

faced is the need for combined efforts to put in place an integrated policy for rural education.

With regard to the implementation of the acquis in forestry much remains to be done.

In the

veterinary field,

while the adoption of Veterinary Act represents an important step,

Poland needs to make further progress in adopting and implementing legislation in order to

achieve full alignment with the

acquis.

The most striking points requiring further alignment with the

acquis

are legislation on animal

welfare and animal transport, legislation on identification and registration of animals, and

movement controls. In addition, contingency plans are not yet in place and no reference

laboratory network has been formally established. As regards animal identification and

movement control, the setting-up of the animal register is the responsibility of the Agency for

Restructuring and Modernisation of Agriculture (ARMA), as set out above in the section on

IACS. The timetable for implementation is ambitious and considerable efforts will be required if

the deadlines to which the Polish authorities have committed themselves are to be met.

Substantial efforts will also be required to put in place the capacity to establish the animal

Preparatory work for implementation of the external movement control system (ANIMO) and

of the animal disease notification system (ADSN) is well advanced

Concerning the restructuring of the meat and dairy industries. the lack of homogeneity in the

enforcement of legislation, as result of an inadequate chain of command between the different

level of administration, could lead to a market distortion as costly requirements concerning the

upgrading of meat and dairy establishments may differ from one region to another. This issue

will have to be afforded particular attention.

The legal basis corresponding to the establishment of a reference laboratories network will be

provided by the New Veterinary Act. The system of laboratory diagnostics has two levels,

central and regional. The central level is the State Veterinary Institute in Pulawy which, after the

provisions of the Veterinary Law come into force, will be a co-ordinator for the system of

national reference laboratories. The State Veterinary Institute reports directly to the Minister of

Agriculture and Rural Development.

The Warsaw-based Polish Centre carries out the accreditation of laboratories involved in food

analysis for Accreditation. The accreditation procedures are due to be completed by December

31, 2002, in particular for food-examining sanitary inspection laboratories at regional level and

at the level of and certain

powiats,

and for laboratories of the National Institute of Hygiene and

Institute for Food and Nutrition.

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In the

phytosanitary sector,

while the Plant Protection Inspectorate seems to be well

organised and the voivodship level sufficiently staffed with skilled people, the main issue is the

lack of

acquis-related

compliant legislation. In particular, there is no system of registration of

producers, exporters, importers and distributors of plants and plant products, and there are

differences in the list of harmful organisms. With regard to the list of plants and plant products

the import of which is prohibited, there are no provisions on protected zones, registration of

producers and importers of plants, nor on rules for marketing of plant products on the single

market.

The adoption of a comprehensive Food Safety Strategy remains outstanding.

Chapter 8: Fisheries

Since the last Regular Report, Poland has adopted the Law on Fisheries, which constitutes the

basis for the legal introduction of the instruments necessary for the implementation of the

fisheries acquis in most areas.

With regard to

resource management, inspection and control,

the recruitment of six staff in

the District Inspectorates of Sea Fisheries, which currently employ 78 persons, and the creation

in April 2001 of a division for the Fishing Vessels Register and for the Monitoring of District

Inspectorates of Sea Fisheries within the Fisheries Department of the Ministry of Agriculture

and Rural Development, are positive first steps. No other progress can be reported in this field

due,

inter alia,

to the fact that implementing regulations such as those related to licences,

logbooks, landing declarations, the date retrieval system and the vessel satellite monitoring

system remain outstanding.

Structural measures

are planned on the basis of two documents; the Polish Structural Policy

in the Fisheries Sector for the years 2000-2006 and the “National Fisheries Strategy”. It is too

early yet to assess any progress on their implementation. The establishment of a division in

charge of co-ordinating the structural policy within the Fisheries Department of the Ministry of

Agriculture is a positive step. Furthermore, a Vessel Register section was established within the

Department of Fisheries. Due to delays in adopting the relevant legislation, little progress was

achieved in the establishment of the fishing vessel register.

Concerning

market policy,

the creation of a division dealing with market organisation within

the Department of Fisheries is a positive step, and measures to provide staff must be pursued.

No particular development occurred since the last Regular Report as regards

State aid

and

international fisheries agreements.

Overall assessment

Both alignment with the

acquis

and the development of administrative capacity have remained

limited. Considerable further work and investment is still needed for Poland to achieve

compliance with the

acquis.

The adoption of the Law on Fisheries has improved the degree of alignment with the

acquis.

However, the adoption of the implementing regulations of this law as well as the adoption of the

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envisaged Law on Fisheries and the envisaged Law on Organisation of the Fishery Market and

its implementing regulations are crucial for the implementation of the Common Fisheries Policy.

In general, the administrative capacity requires significant strengthening both at national and

regional level. More adequately-trained staff are needed at all levels, in particular local

inspectors, so as to ensure adequate coverage of landing places.

More specifically, in the field of resource management, inspection and control, Poland’s

inspection capacity is weak and needs to be strengthened, in particular by allocating permanent

and qualified staff to fisheries inspection and monitoring activities. Currently staff are burdened

with a range of functions which impede their effectiveness: local inspectors of the three District

Inspectorates also carry out tasks related to tax exemption, while inspection at sea is performed

by border guards, who self-evidently must perform a range of other tasks related to their

primary function. A refocusing of the activities of the staff of the bodies involved in favour of

fisheries control activities would be desirable, as well as better guidance from the central level.

In this respect, the adoption and implementation of the legal framework regulation defining the

co-operation between fisheries inspectors, border control officers and police is crucial for any

further progress in inspection and control.

Relevant secondary legislation needs to be adopted for the effective introduction of first sale

notes, EC-compliant licences and logbooks, landing declarations, the date retrieval system and

the vessel satellite monitoring system. There is also a need to reinforce the technical means for

inspection and control, particularly to ensure satellite-based vessel monitoring and the

availability of control vessels. The lack of first sales notes and computerised retrieval of data

renders the performing of cross-checks on the information received from logbooks impossible.

For full-scale satellite monitoring in line with the requirements of the

acquis,

as well as for the

establishment of a vessel-monitoring centre and for completion of the equipment of all vessels,

substantial further work is still needed.

With regard to structural policy, Poland still needs to elaborate a fleet capacity management

plan in the light of available resources. On vessel registration, it has through the Law on fisheries

legally introduced the fishing vessel register. The completion of the re-measurement of fishing

vessels and subsequently finalisation of the separate and exhaustive fishing vessel register

required by the

acquis

remain to be achieved. These actions are a pre-condition for the future

management of the fleet capacity and structural aid in the fisheries sector.

In the area of market policy, no market intervention mechanism for fish products corresponding

to EC instruments has been established so far. There have to date been no regulations

corresponding to EC requirements on producer organisations, although such organisations have

proven to be an implementing mechanism for market policy. Furthermore, work still needs to be

done to implement effective control of the common marketing standards in ports and on

wholesale markets, as well as with regards to collecting and transmitting data concerning the

price reference regime and markets in the representative ports. Considerable further efforts will

be required to accelerate the adoption of legislation so as to catch up with the original timetable.

Poland provides State aid to the fisheries sector in the form of Value Added Tax exemption and

excise tax on fuels for fishing vessels, and by subsidising loans granted for the purchase and

storage of sea fish.

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With regard to international fisheries agreements, Poland has bilateral fisheries agreements with

eight countries and is a member of several conventions and regional fisheries organisations.

Chapter 9: Transport policy

Since last year’s Regular Report, progress has been achieved in the adoption of new legislation

in most areas of the acquis.

On the

Trans-European Transport Networks,

the most important development in 2001 has

been the adoption, in March, of the “Programme of adjustment of Poland’s Road Network to

European Union standards”. The programme has set 2015 as the date by which approximately

15 000 km of roads in Poland will have been adapted for vehicles up to 115kN/axle load. This

programme requires further refinement as regards prioritisation of the various works and the

financing scheme.

With regard to new infrastructure in the road sector, works were carried out on the Pan-

European Transport Corridors II, III and VI. Financing has been provided through the State

budget, EIB loans and the Phare programme.

In the

land transport

sector, good progress was achieved in the adoption of new legislation

related to

road transport.

An important step forward was the adoption of the Law on Road

Transport which aligns legislation with the EC acquis on market access and unblocked the

building up of the necessary administrative structures. In August, the Law on working time for

drivers was adopted. Some progress can also be reported in the field of fiscal harmonisation,

where the Law on taxes and local charges has been passed, and in the field of technical

requirements (installation and use of tachographs). In December 2000, Poland signed the

European Agreement on International Occasional Carriage of Passengers by Bus

(INTERBUS). Its implementation will result in partial harmonisation with the

acquis

requirements regarding international passenger services.

With regard to the

railways,

a new Law on railway transport entered into force in January

2001, transposing various elements of the

acquis

on the development of the community’s

railways, as well as on licensing. This Law paves the way for the creation of the Railways

Transport Office, responsible for transport regulation and engineering, supervision of railways

and traffic safety. In 2001 Poland decided to withdraw licences from railway undertakings

providing mainly domestic rail freight transport that had not started operations. This action has

been critisised in some quarters for a lack of transparency. In September, a regulation on

allocation for railway undertakings was adopted. Poland has also started the restructuring of

the national railway company PKP following the entry into force of the Law on

commercialisation, restructuring and privatisation of PKP. This law creates the framework for

setting up independent companies for infrastructure management, rail passenger transport and

rail freight transport with PKP as a holding company.

In the

inland waterways

sector, progress has been achieved with the entry into force, in April

2001, of the Law on inland waterways. The new legislation implements the

acquis

concerning

recognition of navigability licences, access to the profession, harmonisation of conditions and

mutual recognition of boatmaster’s certificates.

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In the area of

air transport,

progress has been limited to the strengthening of the Main

Commission on Aircraft Accidents Investigation that has became functionally an independent

body. Negotiations between the EC and Poland on the multilateral Agreement to establish a

European Common Aviation Area (ECAA) were concluded in December 2000.

With regard to

maritime transport,

Poland has adopted important legislation concerning safety

matters. In January 2001 the Law on Maritime Safety entered into force. The Law provides the

basis for ship inspection and relevant activities of maritime administrations, port state control

and a minimum level of training of seafarers. In addition, the Minister of Transport adopted a

Regulation on training, professional qualification, watch-keeping and composition of the crew of

Polish flag vessels. According to 2000 statistics under the Paris Memorandum of

Understanding, the percentage of Polish flag vessels detained following port State control was

4.8 %, a decrease in compared to the 1999 5.1 % rate. This compares to an average for EU-

flagged vessels of 3.9% in 2000.

Overall assessment

While Poland’s overall level of alignment with the

acquis

in the transport sector has improved,

Poland still needs to adopt basic legislation concerning air transport to develop appropriate

administrative structures and approve the secondary legislation for all transport modes.

Poland should also continue its preparation for the significant investments that will be needed in

road and rail infrastructure (in particular to ensure that Polish roads can cope with EC vehicle

axle weight standards).

In the case of road transport, the adoption of the relevant law allows efforts to be concentrated

on the transposition of the EC

acquis

and its implementation, with technical and safety

acquis

harmonisation as the main concern. The creation of the necessary administrative capacity in the

road sector needs to be given a high priority, in particular the establishment of the Road

Transport Inspectorate.

With regard to the railways, Poland is confronted with a double challenge: the restructuring of

the national Railways Company and the need to accelerate the adaptation of the Polish railways

to the new European legal framework, including the setting-up of the necessary administrative

structures. Particular efforts have to be made to ensure the independence of the new

infrastructure manager and the creation of the necessary regulatory authority. Meanwhile, the

situation of the Polish railways, both in terms of finances and the degree of market openness,

provides cause for concern. Legislative alignment and the restructuring and modernisation of

Polish railways should continue, taking in mind social aspects. In the area of inland waterways,

the necessary secondary legislation needs to be adopted. Poland also needs to establish an

Inland Waterways Fund for the purpose of administering possible capacity measures in case of

market crises.

In the area of air transport, the implementation of the air transport acquis into Polish legal order

as well as the establishment of the Civil Aviation Office and the Polish Air Traffic Agency has

not taken place as planned. Efforts, therefore, need to focus in the first instance on the

adoption of the necessary primary legislation. Subsequently it will be necessary to continue to

adapt institutional structures for aviation administration in order to progress further in the fields

of safety oversight and licensing..

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With regard to maritime safety, Poland continues to make progress. Secondary legislation to

implement the maritime safety Law needs to be adopted.

Poland’s vessels detention rates as a result of port State control is improving but is still above

the average for EU-flagged vessels. Given the size of the Polish fleet, the enforcement of EC

legislation on maritime safety and prevention of pollution requires additional human resources

and an increased co-ordination between the different levels of relevant authorities. One further

issue to be resolved is that the Polish Register of Ships is still not recognised as a classified

society according to the International Association of Classification Societies. Further efforts are

also necessary to ensure that progress with the adoption of non-safety legislation does not fall

behind the progress made with safety legislation.

Chapter 10: Taxation

Since the last Regular Report Poland has continued to make steady progress, both in terms of

alignment with the

acquis

and in developing its institutional capacity.

In the area of

indirect taxation,

progress was made in both the fields of excise duties and of

Value Added Tax. In the case of the latter, a 7% VAT rate on newspapers, magazines and

non-specialist periodicals was applied in January 2001 (previously 0%). A further change took

place in August 2001, which introduced zero-VAT rates on the printing of books, brochures,

newspapers, magazines and specialist periodicals until end of 2002. The VAT exemption

threshold for small and medium-sized enterprises had been reduced from €20 000 to €10 000,

while for the first time SMEs with at least two employees in certain sectors, notably restaurants

and precision mechanics workshops, must now pay VAT. A 7% VAT rate has been

introduced for Internet services and a 3% VAT rate on computer hardware until the end of

2003. In July 2001 legislation entered into force which provides for a refund scheme for certain

taxable persons not established in Poland.

With regard to excise duties, duty rates were increased in 2001. Duties on tobacco products

were increased in January 2001 with a view to gradual adjustment to the

acquis.

Other notable

excise duties increase those on spirits, engine fuels, beer, and wine. An ordinance was adopted

in June 2001, which introduced the notion of fiscal markers for Polish and imported tobacco,

spirit and wine products.

direct taxation,

the Corporate Income Tax rate has been reduced from 30 per cent in

2000 to 28 per cent in 2001 With regard to taxes on capital, the capital input duty of capital

companies was partly introduced as of January 2001

One potentially problematic piece of legislation focused on tax havens. The amendment to the

Corporate Income Tax Law, which entered into force in January 2001, has given tax offices the

power to control more strictly companies making transactions with companies registered in

countries “admitting detrimental tax competition”. This legislation will be closely monitored so as

to verify its compatibility with the Code of Conduct for Business Taxation.

As regards the area of

administrative co-operation and mutual assistance,

the tax

authorities have accelerated efforts aimed at upgrading the tax administration. Efforts have also

been made to simplify income tax returns.

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Some progress has been achieved with the computerisation of tax services. The accounting

module of the POLTAX system became operational at the beginning of 2001 in all tax offices.

As a result, tax authorities can automatically calculate and control the amount of tax due. The

tax enforcement module became operational in July 2001, although there are still some technical

issues outstanding.

The 2001 Budget Law stipulates an improvement in the execution of both current tax liabilities

and past arrears. The issue of arrears has proved contentious, with the Supreme Chamber of

Control (NIK) releasing in May a report on the performance in this area suggesting a declining

performance with regards to the collection of arrears and proposing a range of administrative,

procedural and staff-related issues as causes for this declining performance.

Overall assessment

Although there has been a relatively high level of alignment of legislation with the

acquis,

number of issues remain to be tackled. In spite of the measures taken to modernise the tax

administration, additional measures are required in this area.

Further legislative alignment is required with regard to the adjustment of VAT to the acquis. This

is particularly the case regarding rates, exempt transactions, the definition of taxable transactions

and a complete refund VAT scheme for foreign taxable persons not established in Poland.

Concerning excise duty, further alignment of the duty rates and exemptions, as well as the

implementation of a tax warehousing system, are necessary.

As regards the tax administration, progress has been observed over the last few years, although

there is still a discrepancy between the high number of staff (51 300, including fiscal control)

and the relative efficiency of the service when compared to Member States.

The Polish authorities are aware of the challenges and the "Taxation Reform and Modernisation

Programme”, is now being implemented. The main priority areas are taxpayer management,

risk management, simplification of tax returns, taxpayer service and information, tax audit, tax

control planning and implementation. A system of objective indicators for the activity of tax

offices has been introduced. Staff training has been increased in order to meet these objectives.

Further efforts are required so as to reduce inconsistency in tax law interpretations and

contradictory decisions. The implementation of the needs identified remains an essential task in

Poland's pre-accession strategy.

Further work is required in order to ensure that Poland will be able, as of accession, to operate

the VAT Information Exchange System (VIES) and the establishment of a Central Liaison

Office (CLO). Significant efforts will also be required on regional and local levels, not only to

make the system work, but to provide necessary information to taxpayers.

Chapter 11: Economic and monetary union

A detailed assessment of Poland’s economic policy in its various aspects has been given above,

in the Chapter discussing the economic criteria (B-2). Therefore, the present section is limited to

a discussion of those aspects of the Economic and Monetary Union

acquis--as

defined by title

VII of the EC treaty and the other relevant texts--which candidate countries should implement

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before accession, i.e. the prohibition of direct public sector financing by the central bank, the

prohibition of privileged access of the public sector to financial institutions, and independence of

the national central bank. As to the process of liberalisation of capital movements, upon the

completion of which compliance with the EMU

acquis

is conditional, this aspect has been

covered above, in the section on

Chapter 4 – Free movement of capital.

No further progress towards alignment with the

acquis

has occurred in the reporting period.

Overall assessment

Poland will participate in EMU upon accession with the status of a country with a derogation

under article 122 of the EC Treaty. It will need to implement the necessary changes to its

institutional and legal framework by the date of accession.

Poland has already adopted substantial parts of the EMU-related

acquis.

The principal

outstanding issues with regard to alignment with the acquis are the participation of a government

representative in the sessions of the Monetary Policy Council, the financial management of the

National Bank of Poland (NBP) and independent audits and the elimination of the government's

ability to submit motions in meetings of the Monetary Policy Council.

A draft amendment to the Law on the NBP designed to bring Polish legislation in line with the

acquis failed to pass Parliament in June 2001.

Chapter 12: Statistics

During the reporting period Poland continued to make progress in this area.

In the field of

macro-economic statistics,

the law on the method of GDP compilation was

adopted in October 2000 and came into force in January 2001.

As regards the combined

population and agricultural census

planned for May/June 2002,

the necessary legislation was adopted and came into force in November 2000. Secondary

legislation on the implementation of the census has also been adopted. There is a consensus

among the political parties represented in Parliament to provide the necessary funds during the

budget years 2002 and 2003 also.

Where

external trade

statistics are concerned, there has been little concrete progress.

As regards labour statistics, the Labour Force Survey questionnaire was further adapted to

comply with the corresponding EC regulation, and the methodology of continuous surveying

with quarterly reporting was introduced.

At the

regional

level, Poland adopted a statistical breakdown of administrative units on levels II

and III which is based on the administrative reform of 1999. This breakdown is consistent with

EU practice and will allow for the production of regional statistics at the level of detail required

for the implementation of EC structural funds.

transport statistics

the legal basis for a new central vehicle register was adopted. The

fully compliant road transport statistics.

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As regards industrial products statistics, the classification of industrial products was further

amended with a view to aligning it with the EC’s PRODCOM. However, the production of fully

compliant industrial production statistics is hampered by the fact that the fiscal authorities are still

using a different classification, which dates back to the 1980s.

Concerning

agricultural statistics,

major progress was achieved in the area of economic

accounts.

Overall assessment

Poland is well advanced in the field of statistics. However, there remain a few areas in which

further work is required.

As regards business statistics, the full implementation of a PRODCOM-compatible

classification for industrial products by the statistical services, as well as by the fiscal authorities,

is becoming an urgent requirement.

In agricultural statistics, certain indicators of animal production still have to be improved, and

structural statistics on livestock should be more detailed. Further work is required on balance

sheets and on statistics on processed dairy products. The overall consistency of certain areas,

for example bovine population and milk production, still needs to be improved.

In external trade, preparatory work on the implementation of the EC’s intra-trade surveying

system ‘INTRASTAT’ has started

In all these areas the full

acquis

implementation could be accelerated by enhanced co-operation

between the responsible authorities.

Chapter 13: Social policy and employment

There has been some progress in this area since the last Regular Report.

Amendments were made to the

Labour Code

(adopted in March, and entered into force in

May 2001) limiting working time, thus intended to bring Polish legislation in line with the

working time directive.

In the field of

equal treatment

for women and men, a law amending the Labour Code and

other Acts has been adopted in order to align Polish legislation to the EC acquis in this area.

Legal approximation in the field of occupational

health and safety

has continued through the

adoption of the Act on Chemical Substances and Preparations, finally adopted in January (and

entered into force in February). This Act partly adjusts Polish legislation to the EC requirements

relating to the provision of safety and/or health signs at work. Two further ordinances were

adopted: one on the maximum allowable concentrations and intensities of harmful agents in the

working environment, and one on the medical examination of workers, scope of preventive

health care and physician’s notices issued in cases prescribed by the Labour Code.

In the field of

public health,

Poland has passed new legislation on tobacco advertisement

which partly transposes the acquis in this field. In September 2001, the Act on Prevention,

Detection, Curing and Control of Communicable diseases was adopted, as well as the Act on

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the National Medical Rescue System. The latter act aims at aligning with the 1999 European

Commission document on “Health and Enlargement of the European Union”. It provides for the

creation of a National Medical Rescue Force as from January 2002 which will improve the

reaction capabilities of services providing first aid to emergency victims. Further, in July 2001,

an Act amending the Geological and Mining law was adopted which provides for the legal basis

for the Minister of Economy to issue secondary legislation concerning safety and health at work

and operation and technical fire control in specific types of mineral-extracting industries. Health

indicators continue to be below those in the EU, but infant mortality has been decreasing from

8.9‰ in 1999 to 8‰ in 2000.

Regarding

social dialogue

, the Act on the Tripartite Commission for Social and Economic

Issues was adopted in August 2001. Two sectoral bodies were established. First, the Joint

Committee for Shipping and Deep-Sea Fishing. This is a tripartite body set up on the basis of

an Ordinance of the Council of Ministers of 17 October 2000. Secondly, the Metal Industry

Workers Team. This is a bipartite body set up on the basis of a Regulation of the Minister of

Labour and Social Policy of March 2001.

The Joint Assessment of the

employment policy

Priorities of Poland by the European

Commission and the Polish authorities was signed in January 2001 and is an important step in

the preparation for accession. This document lays down the key priorities and tasks for the

pre-accession period. It identifies the challenges facing Poland, the government’s plans in the

area of employment and combating unemployment and it provides for an evaluation of the

conformity of the Polish employment policy with the European Union’s recommendations. From

the administrative point of view, there was a further decentralisation of the Labour Fund

resources from the National Labour Office (NLO) towards the voivodship and powiat labour

offices (in accordance with regional unemployment levels). Relative spending on active labour

policy measures has decreased in favour of passive measures, due to the unexpectedly high

growth in unemployment and thereby in obligatory spending. While the number of staff has

increased in the new labour offices structure, there is a problem of lack of qualified staff,

resulting in not always sufficient quality of work in many labour offices; the delays in the

computerisation of the labour offices are also a cause for concern.

Preparations are underway to strengthen structures related to the implementation of the

European Social Fund.

The situation on the labour market is not improving. Employment continues to fall and in 2000,

the employment rate was 55.1%. This was therefore much lower than the EU average of 63%.

The unemployment rate increased to reach a historic record of 18.2% in March 2001 and since

then has been fluctuating. The unemployment rate amongst young people is particularly high, in

March reaching 41%. In order to put a halt to this trend, a special cross-ministerial committee

was established which worked out an emergency anti-unemployment programme that was

adopted by the government in March as the ‘Plan of actions in view of supporting the

development of enterprises and the creation of new jobs’.

In the area of

social protection,

serious problems persist with the implementation of the social

security reform, mainly due to the still inefficient IT system of the Social Insurance Board (ZUS)

and its still very substantial outstanding debts towards the Open Pension Funds (OPF). The

improved situation regarding the enforcement of the collection of contributions is a positive step.

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Preparatory work is on-going in the field of transposing the acquis on anti-discrimination.

Overall assessment

Considerable efforts to align with the EC acquis have been undertaken and should continue to

receive high priority. However, implementation of legislation is frequently scheduled to take

place at a much later stage, and in many cases not until the date of accession. This will make it

difficult to monitor implementation and enforcement.

Poland’s labour law is not aligned with the relevant Community acquis and will require the

adoption of further amendments to the Labour Code. The amendment brought to the Labour

Code intending to align with the working time directive is but a first step. Further work is also

required to align Poland’s legislation with the acquis on equal treatment for women and men.

While the amendments to the Labour Code constitute good progress, the necessary institutional

framework for implementing and enforcing the acquis in this area should still be established.

Furthermore, actions should be undertaken to raise awareness of equal treatment for women

and men, to improve the position of women in the labour market and to increase their

representation in decision making.

In the health and safety field, an important step was made with the adoption of the Law on

Chemical Substances and Preparations. The main work has, however, to commence and

efforts therefore need to be intensified. Several pieces of legislation have provided for further

alignment in the field of public health, although efforts should still be pursued. In the field of

health monitoring, continued efforts to develop a health monitoring system in order to obtain

health data and indicators comparable with the Community system are required.

On social dialogue, whilst the Act on the Tripartite Commission for Social and Economic Issues

was adopted, the tripartite process must be made more effective and ensure the participation of

all relevant social partners. There is a need for better articulation between consultations at

national level and other decentralised collective bargaining and social dialogue (at regional,

sectoral and at enterprise level). Further efforts are also required to promote and strengthen bi-

partite social dialogue structures, especially at sectoral level. Forms of workers’ participation

and information/consultation still need to be introduced and developed. Autonomous social

dialogue is to be considered as an essential policy priority that could ensure the good

implementation of the EC acquis at local level. The Government must also assist the social

partners in preparing them to the active role they will be called to play in the EU context.

Most worrying is the rising rate of unemployment and the decreasing employment rates. The

emergency plan adopted by the government has not yet been fully implemented and the

decentralisation of the labour offices has had a mixed record. The Joint Assessment of

Employment Policy Priorities (JAP) represents an important step in the preparation of

accession. It will now be important to ensure an effective monitoring of the phasing in of the

priorities and commitments contained herein. With regard to the European Social Fund, Poland

should further develop the necessary structures and operational arrangements to implement the

European Social Fund effectively. Concrete efforts are required to improve both the

administrative capacity and the mechanism for co-ordination of European Social Fund

interventions in the context of the European Employment Strategy and the Inclusion Process.

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Regarding social protection, serious efforts are urgently required to implement the social security

reform. The fight against exclusion, as laid down in art. 136 of the Treaty establishing the

European Community, is part of the objectives of EU social policy. As decided at the Lisbon

and Nice European Councils, policies to combat social exclusion combine commonly agreed

objectives at the EU level, and national action plans. The Gothenburg European Council in June

2001 invited candidate countries to translate the Union's objectives of promoting social inclusion

into their national policies.

Finally, further efforts are needed to ensure alignment with the acquis on anti-discrimination.

Chapter 14: Energy

There has been some progress in the adoption of the

acquis

since the last Regular Report. With

respect to restructuring and privatisation, there have been some developments, in particular

within the electricity sector. With respect to general formulation of policy, Poland continues to

make steady progress.

Concerning

security of supply,

alignment to the

acquis

has advanced satisfactorily by virtue of

the adoption of the Law amending the Act on National Reserves and Mandatory Fuel Stocks,

which imposes the obligation for fuel companies to establish and maintain mandatory stocks of

liquid fuels. The law will enter into force in January 2002. Current stocks stand at somewhat

over one third of the required level. In 2000, a new High Voltage DC cable was installed

between Poland and Sweden, thus increasing the security of electricity supply in northern

Poland.

In relation to

competitiveness and the internal energy market,

steps have been undertaken

in order to align with the

acquis.

These need to be completed.

As regards pricing of gas and electricity, following the adoption of the December 2000

Regulations on principles for setting up and calculation of tariffs, tariffs are determined by

enterprises and approved by the Energy Regulatory Authority. Currently gas prices only cover

costs in the case of big consumers. In the electricity sector, a cross-subsidy from households to

industrial consumers persists. However, the distortions have been reduced.

In the

gas

sector, access to the network has been given with regard to domestically produced

gas for bigger customers (35% of the market). The preparations to privatise the Polish Oil and

Gas Company (PGNiG) have advanced with the May 2001 adoption by the Council of

Ministers of the “Baselines for the strategy for privatisation of the gas sector in Poland”. The

strategy provides for a special department to be created within PGNiG to proceed with the

privatisation of four distribution companies and one mining company, as separated from PGNiG

by the Ministry of the State Treasury in December 2000. As for PGNiG itself, it will not be

privatised for at least five years. Its financial situation continues to deteriorate due to restrictions

on tariff setting. Following the December 2000 Regulation on principles for setting up and

calculation of tariffs, the tariffs were increased in the first quarter 2001 by 16% for consumers

and by 60% for producers. PGNiG signed in July 2001 a contract with a Danish company for

transmission of gas into the country, starting in 2003. In September 2001 a Polish-Norwegian

contract was signed.

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With regard to the restructuring and privatisation of the

electricity

sector, the Council of

Ministers adopted in April 2001 the Programme for introduction of an electricity market in

Poland. It sets out the tasks to be carried out before the end of 2002 to achieve a functioning

electricity market in Poland. Key elements are the establishment of a system of compensation

for long-term agreements (SOK), introduction of a daily-hourly balanced electricity market and

appointing an Electricity Market Team. The SOK is a transitional system to address the existing

long-term contracts between energy producers and the Polish Power Grid Company (PSE

S.A.), thereby enabling the recovery of stranded costs. Renegotiating long-term contracts

started in July 2001. In December 2000, the Energy Regulatory Authority acknowledged the

Warsaw Power Exchange as a “competitive market”. In 2000, the transaction volume was

about 2% of all wholesale electricity transactions. The Electricity Market Team monitors and

analyses the situation in the electricity market and its effects on the national economy.

The privatisation of the electricity sector continues on the basis of Government plans which had

to be updated in May 2001 as a result of some delays. Since the last Regular Report, some

plants as well as one distribution company have been privatised.

In the field of

solid fuels,

the coal mining restructuring reform 1998 - 2002 has been

implemented without interruption. In 2000, PLN 1.58 billion (€400 million) were spent from the

budget, which is 12% less than initially provided. A Law was adopted in December 2000 to

amend the Law on adjustment of hard coal mining to function in the conditions of the market

economy and on specific competencies and tasks of mining communities. Twenty-two coal pits

were closed down during the reporting period and seven were under partial liquidation. The

sector’s mining capacity was cut by 10.4 million tonnes and employment by nearly 24 000

down to 151 000 at the end of second quarter of 2001. The rapid increase in the debt of the

sector is of concern. Total liabilities have now exceeded PLN 22.1 billion (over €5.5 billion).

Privatisation of the first two profitable and best performing mines has started.

In the

oil

sector, the privatisation of Rafineria Gdanska is ongoing. The privatisation of Polski

Koncern Naftowy (PKN Orlen) has entered into the third stage of privatisation. The adoption

of the Law on economic activity has abolished the need for import permits.

In the field of

Energy efficiency,

Poland decided in May 2001 to establish a Centre for

Energy Efficiency in Industry within the NECA (National Energy Conservation Agency). At the

end of August, the Council of Ministers adopted the ordinance on requirements regarding

energy efficiency for cooling equipment, implementing the relevant EU directive.

With regard to

the use of renewable energy sources,

a Regulation was adopted in

December 2000 on the obligation to purchase electric energy produced in co-generation with

heat from unconventional or renewable sources. While this Regulation entered into force at the

start of the year, full implementation has not yet been ensured. In August 2001 the Sejm

adopted the Renewable Energy Development Strategy.

Poland has no nuclear power stations. There are five research reactors, of which two have been

shut down, two decommissioned and one, the radioactive waste disposal facility at Rozan, has

been in operation since 1961. A new modern repository is needed, and the site selection

process has started. With the adoption of the new Atomic Law in November 2000, Poland has

made important progress towards alignment with the

acquis.

The Law will enter into force in

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January 2002 and will create a framework for secondary legislation to introduce Euratom

nuclear safeguards.

Overall assessment

Poland has achieved a moderate level of alignment with the

acquis

and further efforts are

required with regard to both the adoption of legislation and the establishment of the appropriate

structures to ensure its implementation.

Developments relating to compulsory fuel stocks are encouraging, but further progress is

necessary to align with Community requirements. As regards alignment with the

acquis

in the

field of the internal energy market, Poland needs to pay careful attention to ensuring timely

alignment.

Further efforts are required to bring the Energy law in line with the acquis.

As regards pricing of gas and electricity, despite the progress noted above, price distortions in

the gas sector as well as cross-subsidies in the electricity sector continue to exist and should be

eradicated.

Further progress is required in the gas sector to resolve outstanding difficulties. The necessity of

further restructuring is evident, and the May 2001 strategy is a step forward. Two previously

adopted restructuring programmes (the first in 1996, the second in 2000) have resulted in a

more concrete schedule of activities, which should lead to the privatisation of companies

separated from PGNiG and the introduction of a competitive market. The issue of the

diversification of gas supplies requires attention. It will be particularly important to ensure

market opening in accordance with objective, transparent and non-discriminatory criteria, e.g.

to lift the restrictions on access to the gas network and to determine the eligible customers

The electricity sector has made progress in its preparations to meet Internal Market

requirements. The timely implementation of the April 2001 programme to introduce the internal

electricity market in Poland is, however, imperative for the further restructuring of the market.

Restructuring of the coal sector has achieved considerable results. Further progress requires,

however, more intense preparation for privatisation in order to achieve an increase in

productivity and long-term sustainability. The productivity of the sector is still below

international standards. Sufficient budgetary appropriations for the implementation of the

programme need to be ensured. The future role of coal, imported or produced in Poland

deserves enhanced attention in the country's energy planning.

As regards the oil sector, the privatisation process should be continued, creating a well-built

foundation for a competitive market.

Although in the area of Energy efficiency alignment with the

acquis has

progressed, the level of

implementation is still unsatisfactory and needs to be supported by a coherent State policy in

this field. Compared to the EU, Polish levels of energy efficiency and use of renewable energy

remain very low, and require effective steps to further enhance them. The establishment of a

Centre for Energy Efficiency is a welcome step. The National Energy Conservation Agency and

the 10 regional agencies need to be further strengthened. Further efforts are needed to enhance

the use of renewable energy resources.

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The Ministry of Economy continues to be understaffed and requires further strengthening to fulfil

the appropriate tasks set out in the

acquis.

The Energy Regulatory Authority employs

approximately 250 staff and should continuously prepare for its future tasks in the internal

energy market.

As regards the issue of nuclear energy, the European Union has repeatedly emphasised the

importance of a high level of nuclear safety in candidate countries. In June 2001, the Council of

the European Union took note of a Report on Nuclear Safety in the Context of Enlargement. In

July, the Commission conveyed this report to the Candidate Countries.

The report recommends all Candidate Countries to continue their national programmes

regarding the safe management of spent fuel and radioactive waste, and regarding the safety of

their research reactors.

Poland will need to ensure compliance with Euratom requirements and procedures. In this

respect, continued attention should be given to preparing the implementation of Euratom

Safeguards, in particular regarding the reporting of nuclear material flows and inventories

directly by the persons or structures operating nuclear installations or storing nuclear material. It

should be noted that Poland has concluded a Full Scope Safeguards Agreement with the IAEA.

An Additional Protocol to this Agreement is in force since May 2000. Poland has completed

the ratification of the Energy Charter Treaty.

Chapter 15: Industrial policy

Since the 2000 Regular Report, there has been limited progress directly related to the evolution

of industrial policy, although developments in other areas, notably with regard to state aids,

should have an impact.

As indicated in previous Reports, Poland's

industrial policy

is in line with the principles of the

EC's own and there have been no significant further developments since the last report.

Increased attention has been paid to the issue of

investment promotion.

The government

adopted an "Investment Increase strategy" in March 2001.

In 2000 Poland saw a decline in the overall level of foreign direct investment (

Section

see

B.1.2. - Economic criteria).

The processes of

privatisation and restructuring

have continued. In the case of privatisation

in particular, the pace of developments was slower than in the previous year. It is difficult to

identify the extent to which this is a reflection on the success of the process in 2000 or a

consequence of difficulties with key privatisations. The Treasury still owns a dominant stake in a

number of Polish companies in sectors such as steel, energy, gas, oil, telecommunications, heavy

chemical industry, air transport, railways, spirits, sugar and defence.

In the case of the

steel

sector, in June 2001 the Council of Ministers adopted a revised steel

restructuring plan for the sector. This plan differs from previous plans in a number of significant

Developments concerning Industrial policy should be seen in relation to the overall enterprise policy, including the SME

policy (see

Chapter 16 – Small and medium-sized enterprises).

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ways, notably with regard to the future structure of the industry and investment levels. The final

direction and detail of the plan will be determined by the results of the ongoing privatisation

process. In July, the law on steel sector restructuring was adopted. This provides the necessary

legal instruments to facilitate the restructuring process.

Restructuring of the

coal

sector continues apace. Reductions in production capacity and

employment have continued, although more slowly than in the past in the case of employment. A

new law on the adjustment of the hard coal industry came into force in February 2001.

(see

Section B.1.2. - Economic criteria).

Preparations are well underway for the restructuring of

the

sulphur

mining industry. A number of legislative measures have been adopted, and in

February 2001 the Council of Ministers adopted its programme for the restructuring of the

sulphur mining and processing industry.

Overall assessment

Overall, developments in the field of industrial and enterprise policy have been positive. In

general, the principles of Poland’s industrial policy are in line with the concepts and principles of

EC industrial policy.

The main strengths and weaknesses which were identified in the 2000 Report persist. As

previously noted, there is a clear discrepancy between the stated policies and practice. Policies

are usually well defined, but their execution has been rather limited, or in some cases postponed

with a detrimental impact on the competitiveness of Polish industry.

The central objective of Polish industrial policy is to create a proper environment for industrial

operators, to improve the international competitiveness of industry, and to facilitate and

encourage its adaptation to the business environment and industrial structures in the EU. Poland

has achieved much in the way of creating an appropriate legal environment in which businesses

can operate, although more attention is required with regard to an important dimension of

industrial policy: transparency, monitoring and active control of state aids (see

also Chapter 6 –

Competition).

Efforts to encourage investment, provided they are in line with the obligations of the Europe

Agreement and the

acquis,

are to be encouraged. Foreign direct investment, while high in

absolute terms, is relatively low per capita. Poland's reputation as a stable location for

investment has come under close scrutiny in the light of a number of highly publicised disputes.

Further efforts are also required to put the innovation policy into practice.

Over the few years there has been significant progress with regards to restructuring and

privatisation. However, considerable efforts must still be made, most notably with regard to

steel, where there has been encouraging steps, but also in other heavy industries, coal,

chemicals and munitions.

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Chapter 16: Small and medium-sized enterprises

Since the last Regular Report, Poland has made steady progress with regard to the

implementation of its SME Policy.

In view of the overall

SME strategy and implementing policies,

the most significant step has

been the establishment of the Polish Agency for Enterprise Development. This came into

existence in January 2001. The Agency represents an upgrading of the previous (highly

regarded) SME foundation. The agency took over the existing personnel, but has also gained

new powers and financing from the Government.

Access to finance, as has been noted in previous reports, remains an important constraint on

SME development. There has been an effort to improve the functioning of the loan guarantees

system, including financing the advisory assistance for the six newly established loan guarantee

funds and providing subsidies for local, sub-regional and regional funds. Some €5.2 million have

been allocated for this purpose.

More broadly, the budget directly allocated for the implementation of the “Government policy

guidelines for SMEs until 2002” tripled from 2000 to 2001. However, about €18 million for a

large country like Poland is still a very limited amount, in particular compared to the allocations

made for restructuring large companies.

In March 2001, an amendment to the Law on Investment Funds came into effect with the aim

of improving conditions for establishing and running venture capital funds in Poland. It provides

for more flexible conditions, involvement of participants in the management and reinvestment of

profits. It is too early to comment on the practical impact of this amendment on the development

of venture capital as an important source of finance for SMEs.

There have been further improvements in legislation related to the

business environment.

The

law on business activities entered fully into force in January 2001. Since January 2001, a

centralised and computerised court registry system for new enterprises has been introduced.

Procedures have been unified, simplified and shortened. The system contains extensive

information on the entrepreneur that is important for business activities and thus should

contribute to greater transparency.

Overall assessment

SME policy in Poland is generally in line with the principles and objectives of the Community's

own policy. The entry into force of the law on economic activity and the new commercial code

has further strengthened the progress which Poland has made in creating a proper legal

environment in which businesses can operate. The definition of an SME is in line with the

recommendation of the European Commission.

The creation of the Polish Agency for Enterprise development should further assist the SME

sector. The agency will need to be able to steer its own course between the government, which

is its predominate source of financing, and other, business-based groupings which are active in

Developments concerning SME policy should be seen in relation to the overall enterprise policy, including the industrial

policy (see

Chapter 15 - Industrial policy).

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the sector. There is scope for the Agency to act as a primary interlocutor in discussions with

SMEs and as a key advocate of the sector. In addition, due consideration will have to be given

to the role of the agency in the future implementation of the structural funds. The agency

continues to co-ordinate the National SME Services System with over 150 SME support

institutions of various forms all over the country.

Apart from complaints about the bureaucracy and high indirect labour costs, the biggest

problems for SMEs are high interest rates combined with high requirements for bank credits.

There has been some progress in improving access to finance, but the critical mass still has to be

reached to have a clearly visible impact across the whole country. With regard to information

and advisory services: improvements have been made, but can be extended.

Chapter 17: Science and research

Poland has continued its efforts in this sector, including the prioritisation of its association with

the Fifth Framework Programme. As described in the 2000 Regular Report, this has included

the formation of contact points under the auspices of the State Committee for Scientific

Research (KBN). During the course of 2001, nine regional, 22 thematic and 125 local contact

points were established.

As for other candidate countries associated to the Fifth Framework Programme, Poland has

been granted observer status in CREST (Comité

pour la Recherche Scientifique et

Technique).

An amendment to the Act establishing the KBN entered into force in January 2001. This more

clearly defines the two main responsibilities of the KBN: those of a typical ministry for science

and technology and those of a research and development funding agency.

Overall assessment

There have been significant developments in this sector over time. Further efforts are required,

notably to improve the level of innovation within Poland’s economy in general and in industry in

particular, and to encourage linkages between research institutes and industry, in particular

small and medium-sized enterprises. There is also a need for a more positive approach of R&D

institutions to commercialising research results. In this context the finalisation of the long term

National science/technology Policy (lasting until 2010) is essential.

While considerable efforts have been made to establish the financial and institutional framework

for participation in the Fifth Framework Programme, to ensure that that participation is

successful similar efforts are required to reinforce research-related administration capabilities as

well as to strengthen research related infrastructure.

Further efforts are required to improve the link between research and education, including

enhancing the possibilities for universities to carry out scientific research.

Globally, the strengthening of the links between institutions facilitating innovation and technology

transfer in all sectors is needed, down as far as the regional level. This requires secure and

stable financial institutions dealing with innovation.

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For the further development of the sector and for an effective integration of -Poland into the

European Research Area, it is important to increase the gross domestic expenditure on research

and technological development. In the case of Poland both the gross expenditure on Research

and Development and business activity in research remained constant comparing 2000 to 1999.

Chapter 18: Education and training

Further progress was made in this area.

In the reporting period Poland started to participate in the second generation of

Community

programmes

Socrates and Leonardo, as well as in the new Youth programme (which

incorporates European Voluntary Service activities) (see

section A.b - Relations between the

European Union and Poland)

The amendment to the School Education Act adopted in December 2000 has enabled Poland

to align its legislation with the requirements of the

Directive concerning education of

children of migrant workers.

The Law entered into force in January 2001, with a few

exceptions which will enter into force upon accession (right of learning in post-gymnasium

schools for migrant workers and their families from the EU member states, free classes in Polish

language and lessons on culture and language of the country of origin).

As regards

reforming its education and training system,

as has been noted in the 2000

Regular Report, new arrangements were made for teachers through the adoption of the

teacher's charter, though their initial implementation has on occasion proved problematic. While

nearly all teachers received the amounts due for their 2000 pay rise, only 11% of local

governments declared that they would be able to pay out the full amount in June as foreseen for

year 2001, while the rest could pay only part (44%) or did not have sufficient budgetary

resources (45%). Since January 2001 provisions have been in force laying down standard

examination procedures for teachers, thus opening up equal opportunities for all graduates

regardless of their regional location.

The first stage of implementation of the National Strategy for Employment and Human

Resources Development has started, including examination standards in public schools and

several training projects for trainers for the new vocational education system and for teachers in

business and management.

The Ministry of Education has seen a reduction in personnel in the Department of European

Integration, which risks reducing its capacity for strategic and long-term planning.

Overall Assessment

Legislation is now in line with the

acquis

and participation in Community programmes is

progressing satisfactorily.

The immediate challenge facing the sector is the implementation of the educational reform. In the

longer term, the challenge which must be met is to develop an integrated approach to human

resource development aimed at the expanding sectors of the economy and the development of

civil society, notably facilitating development in all regions including those with a strongly rural

nature or which are undergoing industrial restructuring. The implementation of such an approach

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will require not only appropriate resources, both budgetary and human, but will also entail an

enhanced level of co-operation between the national and regional levels and the capacity to

provide the types of education and training best suited to real needs on the ground.

In this context further work is still needed to develop an appropriate system of vocational

education and training (VET). The current VET system lacks both flexibility in terms of

provisions tailored to the needs of individuals and responsiveness with regard to the

requirements of the labour market.

Within the Ministry of Education further strengthening of staff resources is required if longer

term strategic needs are to be met in addition to the day-to-day implementation of policy.

Chapter 19: Telecommunications and information technologies

Progress made since the last report has been relatively limited, considering the considerable

strides made during the previous reporting period.

Concerning the

liberalisation of the telecommunications market,

the National Regulating

Authority (NRA) is now fully functioning as a separate independent legal body with wide

powers to regulate the sector, and by mid-2001 the new body had succeeded in ensuring that

the competing long distance services for which licences had been granted in 2000 were able to

operate in practice. TPSA (Polish Telecommunications SA), the former monopoly, has been

issued with a licence. The designating of TPSA as having significant market power was

severely delayed and this delayed the imposition of appropriate regulatory provisions but such

decision was finally taken by the President of the Telecommunications Regulatory Authority in

September 2001.

The privatisation process of TPSA has advanced and strategic private investors are in place.

UMTS licences have been issued to the three existing mobile operators.

As regards the

regulatory framework,

the Law on Telecommunications has been amended in

June 2001. This amendment entered into force in July 2001 and relates to the general rules for

undertaking business activities in the

postal

area.

With regard to the

postal services,

the market is dominated by the

Poczta Polska,

which

enjoys a monopolistic position in the domestic clearance, sorting, transport and delivery of letter

items up to 2000g in weight and parcels, as well as in the handling of postal money orders.

Overall assessment

Poland has advanced considerably in the telecommunications sector over the last few years in

respect of regulation and privatisation. The speed of implementation has not, to date, matched

this progress. The decision to delay opening up the international telephony market for

competition and low internet penetration are symptomatic of this. The promising beginnings

have yet to result in satisfactory arrangements that are equitable between operators in which the

state has a financial interest and other operators.

Since 1998 Polish telecommunications policy has developed strongly along the lines of EC

practice but the fixed communications sector still shows a legacy from earlier years of relative

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under-achievement, particularly in rural areas - where the implications of Universal Service

represent a significant challenge. The mobile sector has been more successful. The growth

potential of the sector in Poland remains very high.

The foundations laid by the Telecommunications Act now need to be built on to secure

complete compliance with the

acquis,

particularly regarding cost-orientation, local

interconnection, affordability, universal service and the availability of carrier selection and

number portability facilities. Further progress is now needed with the remaining pieces of

secondary legislation that are necessary for the market to be regulated properly and fully

opened. Much of the success of the reform of the telecommunications sector will depend upon

the NRA continuing to improve its capacity to oversee and regulate the sector in an efficient and

independent manner.

The positive effect of administrative stability played an important role in taking the sector

forward in the past, and this needs to be maintained as the sector is currently entering a new

evolutionary phase.

In respect of postal services, although draft legislation has been under discussion since February

2000, little progress has been noted, and it will require significant further efforts if the timetable

for alignment with the

acquis

is to be met. The establishment of an independent Postal Market

Regulatory Authority remains to be achieved.

Chapter 20: Culture and audio-visual policy

No particular developments are to be reported regarding legislative alignment with the

audio-

visual

acquis

since last year’s Regular Report.

With regard to administrative capacity, a special group has been set up within the National

Broadcasting Council to work on general amendments to the Broadcasting Act: for example,

regulations concerning terrestrial digital platforms.

In October 2000 the Polish Parliament passed a Bill allowing for ratification of the Protocol

amending the Council of Europe Convention on Transfrontier Television.

No particular developments are to be reported in the field of

culture.

Overall assessment

Poland has long had an active and efficiently managed audio-visual policy. However, further

steps are still necessary to align it with that of the Community.

Further legislative alignment in the field of audio-visual policy is required before accession,

notably regarding jurisdiction, definition of European works, promotion of independent and

European works and the proportionality of measures promoting works originally produced in

Polish. These should be aligned through the amendment to the Broadcasting Act which is

currently being discussed in Parliament. In order to ensure conformity with Poland's obligations

under the Europe Agreement, it would be necessary for the latter amendment to put an end to

the limits placed on the maximum share of foreign capital in TV broadcasting stations (which is

still restricted to 33%).

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As indicated, Poland has signed and ratified the Council of Europe Convention on Transfrontier

Television and will be bound by its amending protocol upon the date of entry into force.

Administrative capacity in the field of audio-visual policy seems sufficient, although some

strengthening may be required in line with the revision of Polish legislation. In the field of culture,

the administrative capacity for the implementation of the Culture Community Programmes could

still be enhanced.

Chapter 21: Regional policy and co-ordination of structural instruments

Since the last Regular Report, limited progress has been achieved in preparing for the

implementation of structural policies.

Regarding Poland’s

territorial organisation,

the provisional classification corresponding to

NUTS, agreed between the Commission and Poland, follows the existing territorial

organisation. Following the 1999 territorial reform, the 16 newly created self-government

provincial (voivodship) authorities are now effectively carrying out regional policy functions. In

January 2002 adjustments will take effect concerning the territorial division with the creation of

7 new

Powiats

(provisional classification corresponding to NUTS level 3), changes in the

borders of 6

Powiats

and changes in the borders of 2

Voivodships.

With regard to the

legislative framework,

the Law on Regional Development of May 2000

continues to form the basis for regional policy in Poland and defines the principles for support

towards regional development. In application of this law, “regional contracts” were concluded in

June 2001 between each

Marshal

(elected representative of the

voivodship)

and the Minister

for Regional Development. These contracts determine, for the years 2001 and 2002, the

amount of support provided to each regional self-government in the pursuit of its development

priorities, under the supervision of the

Voivod

(representative of the central government).

The conclusion of these regional contracts has contributed further to the clarification of

Poland’s

institutional structures,

but otherwise no particular progress has been made since

the last Regular Report.

With regard to

programming,

in December 2000, Poland adopted a National Strategy for

Regional Development for 2002-2006 and also adopted the Support Programme for 2001-

2002 to start implementing this strategy. This Support Programme, amended in April 2001 to

bring it in line with Poland’s 2001 budget, provides just under €1.5 billion (nearly 6 billion PLN)

over two years towards implementation of the regional development priorities, which have been

the subject of the conclusion of the regional contracts referred to above. These funds constitute

grants towards earmarked projects and do not for the moment imply a decentralisation of public

finance in the absence of amendments to the law on the income of regional self-governments.

The National Strategy for Regional Development constitutes one of six medium-term strategies

being developed for the period 2002-2006 which should lead towards the establishment of

Poland’s National Development Plan (NDP) for 2002-2006 as the basis for the development

plan required by the Structural Funds Regulations.

Limited progress has been made over the last year on the application of the

partnership

principle.

While, together with the regional contracts,

voivodship

steering committees have

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been established which include representatives of the social partners, in practice the presence of

the social partners in consultations at central level remains limited.

A task force has been established by the Ministry of Finance for

monitoring and evaluation,

consisting of representatives of various ministries and including observers from two agencies,

with the aim to develop and establish one unified monitoring and evaluation system for Structural

Funds. The establishment of the regional contracts described above has contributed somewhat

to the further development of

financial management and control.

As concerns

statistics,

there has been no particular progress.

Overall assessment

Notwithstanding significant progress made in previous years in developing the necessary

structures for the implementation of the Structural Funds, developments in this area have largely

stalled. Considerable additional efforts are needed to establish operational bodies and to

increase administrative capacity for the implementation of the Structural Funds.

A provisional classification corresponding to NUTS has been agreed upon with the

Commission. However, new changes in the territorial organisation are still to be officially

submitted to, and agreed with, the European Commission.

At the regional level variable progress has been achieved with programming, while at the

national level no positive new developments can be reported. There is at present no clear idea

as to the structure of future programming documents. Poland should give careful consideration

to Commission recommendations for the period up to 2006 regarding structure and timing. It is

of high importance that Poland is able to establish the envisaged National Development Plan in

time. In order to match sectorial and regional approaches, inter-ministerial co-ordination and

partnership need to be made effective and comprehensive, both at the national and at the

regional level. A strong input of the regions into the programming process taking place at the

national level should be ensured.

Substantial progress is also needed at the level of the technical preparation of projects (the

project pipeline) to be co-financed by the Structural and Cohesion Funds.

The contract system which is being put in place in Poland for the implementation of regional

policy has the potential to play a key role in the preparatory process and, in the medium term, in

Poland's socio-economic development. The new mechanism will need to be assessed in view of

its capacity to participate in Structural Funds operations in Poland.

For Structural Funds key issues concerning the distribution of responsibilities remain open. The

future Managing Authorities and Paying Authority or authorities must be designated and the role

of the line ministries (or other bodies to act under the overall responsibility of the future

managing and paying authorities) still needs to be defined. A clear division of responsibilities

must be established at the central level, between central and regional levels and at the regional

level between

Voivods

and

Marshals.

The role of the regions in the management of the funds in

the period up to end 2006 requires careful consideration.

Poland must make considerable efforts to strengthen administrative capacity at the national and

regional level with a view to the management and implementation of future Structural and

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Cohesion Funds. Above all, the administrative capacity of the units within the ministries and/or

other bodies which will be designated as future managing authorities or which will hold

important delegated responsibilities needs to be considerably strengthened in order that they will

effectively be able to take on the responsibility for the efficiency and correctness of the

management and implementation of Structural Funds. Concerning the European Social Fund

(ESF), Poland has started developing the necessary structures and operational arrangements to

implement the ESF. However, substantial efforts are required to improve both administrative

capacity and mechanisms for co-ordination of ESF interventions in the context of the European

Employment Strategy and the Inclusion Process.

The timely availability and functioning of an effective monitoring and evaluation system will be of

crucial importance. A Task Force under the lead of the Ministry of Finance has made important

progress in defining such system. The actual establishment of the system is of the highest

priority.

While significant progress has been achieved by Poland with regard to the legislative alignment

in the area of public internal financial control, further substantial efforts are required in order to

complete the implementation of sound financial control systems. Appropriate systems and

procedures for financial management and control need to be established, in particular in relation

to the structure of the managing and paying authorities, in order to fulfil the specific requirements

of the Structural Funds regulations. Multi-annual programming and budgetary planning needs to

be introduced.

As for regional statistics, further efforts are necessary to bring them up to the level required for

regional policy planning and programming, in particular ex-ante evaluation. Poland still needs to

improve the system for the collection and processing of relevant statistical information for the

purposes of ex-ante evaluation.

Chapter 22: Environment

Since the last Regular Report, Poland has made significant legislative progress through the

adoption of important framework laws, notably the Act on Environmental Impact Assessment

and on Access to Information, the Act on Waste and the Act on Environmental Protection.

With regard to the

integration of the environment

into other policies, Poland has approved

the 2

National Environmental Policy. The revised National Environmental Policy will establish

clear objectives and targets for Poland's environmental policy. The National Environmental

Policy is to be completed by an Action Programme for each sector (air, water, waste). It

incorporates the principles of the EU 5

and 6

Environmental Action Programmes. As regards

integration, Poland has adopted the strategy for sustainable development: "Poland 2025 - Long-

term Strategy for Permanent and Sustainable Development". This will provide guidelines for all

sectoral policies to ensure their respect of the environment and orient them towards a

sustainable approach. As such, the strategy constitutes a framework for the integration of

environmental concerns into sectoral policies at national, regional and local level. In the field of

horizontal legislation,

the Act on Environmental Impact Assessment and on Access to

Information entered into force in January 2001. The Environmental Protection Law (adopted by

the Parliament in April 2001) contains the requirements for the mechanism for monitoring

emissions of carbon dioxide and other greenhouse gases. However, a national strategy on

climate change still needs to be developed.

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As regards

air quality,

the Environmental Protection Law (adopted by the Parliament in March

2001) and the Law on Waste (adopted by the Parliament in 2001) ensure partial transposition

of Community legislation on air quality and admissible levels of air pollutant emissions. Within

two years of the above-mentioned acts taking effect, the voivods are to prepare investment

programmes for the improvement of air quality in the areas where permissible concentrations

have been exceeded.

In the area of

waste,

the Law on Waste and the Law on Packaging and Packaging Waste have

been adopted. The former entered into force in October 2001. January 2002 is the date of

entry into force for the latter, with the exception of the provisions on the heavy metal content in

packaging which comes into effect a year later. Moreover, the Law on the Duties of

Entrepreneurs to handle certain waste as well, as product and deposit charges, adopted in June

2001, will enter into force in January 2002. These acts, together with provisions of the

Environmental Protection Law and their executive regulations, will ensure full transposition of

the

acquis

on waste management.

In the field of

water quality,

the Act on Water has now been adopted. The Act on Collective

Water Supply and Sewage Discharges has been adopted by Parliament. The Act partially

transposes the directives on drinking water and on urban wastewater treatment. To complete

transposition of the acquis in this sector, ministerial regulations need to be issued on the basis of

the laws now adopted. In addition, the Act on Environmental Protection has been adopted. The

Act transposes some requirements of the water framework directive. The Polish Government

has decided to identify the whole territory of the country as being within the catchment area of

sensitive waters under the terms of the directive on urban wastewater treatment. Moreover,

Poland has initiated a pilot river basin management (on the river Narew) in view of the water

framework directive.

In the field of

nature protection,

the Law of December 2000 regarding amendments to the

Law on Nature Conservation, together with its executive regulations, will ensure the

requirements are met regarding the protection of the natural habitats of wild fauna and flora and

the protection of wild birds.

As regards

industrial pollution control and risk management,

the Environmental Protection

Law (adopted by the Parliament in March 2001), the Act on Implementing the Environmental

Protection Law adopted in July 2001, and the Law on Waste (adopted in April 2001) provide

the basis for alignment with the acquis regarding the reduction of industrial pollution and risk

management. Poland still needs to adopt ministerial regulations in order to complete

transposition. As regards implementation capacity, preparations have been made to implement

the IPPC Directive by means of pilot projects undertaken in three voivodships (Dolnoslaskie,

Lódzkie and Slaskie) and training courses were organised for representatives of governmental

and self-governmental administrations and industry. The Polish Accreditation Center For the

Environmental Management and Audit System (EMAS), has been established.

In the field of

genetically modified organisms and chemicals,

the following laws were

adopted: Law on Genetically Modified Organisms, the Law on Chemical Substances and

Preparations, the Law on Biocidal Products and the Law on Control over the Handling of

Substances that Deplete the Ozone Layer. Together with ministerial regulations, this should

ensure full transposition of the chemicals-related acquis. An Office of the Inspector for

Chemical Substances will be established to act as competent authority. With regard to

noise,

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the Law on the System of Conformity Assessment, Accreditation and Amendments to Certain

Acts was adopted by the Parliament in April 2000.

In the field of

radiation protection

(see

also Chapter 14- Energy),

the Atomic Law was

adopted by the Parliament in November 2000. To complete transposition of the

acquis,

executive regulations to this law still need to be adopted.

Poland has carried out some actions to develop its administrative capacity in the field of

environment. The Ministry of Environment has been strengthened and co-ordination between its

various departments as well as with other ministries has improved. The units dealing with EU

issues have been granted more staff. Also, decisions have been taken to increase the staff of the

various environmental authorities, including the voivodships, powiats and gminas in view of their

implementation of EU directives but this has not yet been carried out. Poland has also engaged

in training the staff of voivodships, powiats and gminas, notably on EIAs, IPPC and air

monitoring.Poland’s environmental investments have remained stable at just under €2 billion,

(7.6 billion PLN) corresponding to 1.7% of national GDP. The National Fund for

Environmental Protection has continued to promote investments, primarily in air protection and

water, but without a comprehensive strategy for implementing EC directives. The main financial

instrument for environmental investments are now the voivodship funds. These primarily operate

through soft loans. Although the powiat funds have increased, they remain limited. This is also

the case for the gmina funds. Nonetheless, the gmina funds will have to shoulder a large share of

environmental investments as issues such as waste management and wastewater treatment is

usually their responsibility. With ISPA, foreign assistance will amount to some 10% of total

environmental investment.

Overall assessment

Poland has achieved considerable alignment with the EC environmental

acquis.

Poland has also

prepared the necessary implementation programmes in the field of air, waste, water and

industrial pollution. These programmes need to be continuously updated as implementation

proceeds. Poland still needs to adopt ministerial regulations in order to transpose the concrete

requirements of the air related directives. Together with ministerial regulations, this should

achieve full alignment of the chemical-related acquis. Ordinances to transpose the directives on

fuel quality still need to be adopted, once the Environmental Protection Law has taken effect.

Poland should continue to integrate environmental protection requirements into the definition and

implementation of all other sectoral policies with a view to promoting sustainable development.

Poland's administrative capacity for EC environmental directives remains a matter of concern.

The voivodships and powiats, still need to be strengthened. Staff resources are limited and the

awareness about the requirements of EU environmental directives needs to be improved.

Significant training in EU environmental policy is still necessary, Poland's division of tasks over

numerous agencies and administrative levels has, in some cases, caused unclear responsibilities.

Different bodies are responsible for setting objectives, permitting, monitoring, inspection and

financial instruments. This risks diminishing the accountability for achieving environmental

standards.

As regards permitting, Poland's system is media based. There are no integrated permits and

there is a lack of co-ordination between the various permits. Nor do permits always cover small

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installations. However, Poland is moving towards integrated permits. These will start to be

issued from January 2002. In this context, it will be of key importance to strengthen the co-

ordination between voivodships and powiats. The need for integration will require the staff of

voivodships and powiats to assess operating performance more widely than at present and to

undertake integrated analyses. To this purpose, Poland will have to establish an efficient system

for co-ordination and communication between the relevant staff.

As regards planning and programming, Poland has started preparations for air quality

programmes, which should be ready by accession. This is also the case in the waste sector with

preparations for the national waste management plan. However, only a small share of the

gminas (according to estimates 25%) has developed waste management plans. It is important to

strengthen the capacity of gmina and to speed up their preparations for EU environmental

policy. This is vital to ensure that Poland has the necessary programming capacity at accession.

Poland has an extensive system of inspection. These are carried out regularly and with

satisfactory technical expertise. However, these inspections focus on large installations and there

can be a lack of control of small and medium sized installations. In addition, inspections are

usually media-specific and do not yet apply an integrated approach. There is not always

sufficient co-ordination between monitoring and inspection. Laboratories and equipment also

needs to be improved.

Poland still needs to strengthen its monitoring capacity. Some progress has been achieved in the

field of air and water but the monitoring infrastructure and equipment still needs to be up-graded

and modernised. There is a need to improve the co-ordination of monitoring and reporting

procedures and to use monitoring data more efficiently for permitting and inspection.

Lastly, Poland's environmental investments remain significant. However, Poland needs to

establish comprehensive investment strategies in order to focus the available resources and

environmental investments on implementing the requirements of EC directives. This would

improve the efficiency of environmental investments.

Chapter 23: Consumers and health protection

There has been further progress in alignment with the

acquis

and in improving administrative

capacity necessary for the effective implementation of the

acquis.

In the field of

safety related measures,

three executive acts under the Law on General

Product Safety were adopted in November and December 2000. The first Regulation aims at

transposing the directive concerning products which, appearing to be other than they are,

endanger the health and safety of consumers, and entered into force in January 2001. The

second Regulation entered into force in February 2001 and introduces the Community system

for the rapid exchange of information on dangers arising from the use of consumer products.

The third Regulation introduces the Community system of monitoring consumer accidents.

The amendment to the Act on Tourist Services is a

non-safety-related measure

, which was

adopted in December 2000. It aims at transposing the directive on package travel, package

holidays and package tours. The Law on Consumer Credit which aims at transposing the

acquis in area of consumer credit was adopted in July 2001 and will come into force 12 months

after publication. The law on Prices was adopted in July 2001 and will come into force 3

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months after publication. This legislation is intended to align with the acquis relating to the

indication of prices of products for consumers.

The Trade Inspectorate is responsible for

market surveillance.

Its position was strengthened

by the Act on Trade Inspection which was adopted in December 2000 and entered into force

in April 2001. The act specifies the tasks and organisation of the Inspectorate and awards it the

status of a supervisory body, subordinated to the President of the Office for Competition and

Consumer Protection (OCCP). The Trade Inspectorate was also granted additional resources

in 2000.

In 2000, the OCCP received 1016 complaints and requests for advice concerning consumer

rights. 203 decisions were issued in the area of unfair competition. In 2 cases, the OCCP

addressed the courts. The issues treated mainly concerned inadequate marking of products,

misleading or prohibited advertising, and imitation of another product. There was a rapid

acceleration in the rate of complaints during 2001, with during the first half of the year 1601

complaints received. In the same timeframe 180 decisions were issued and 2 cases addressed

to the courts.

The legal position of the OCCP has been strengthened through the new Act on Competition

and Consumer Protection which came into force in April 2001. The law establishes a regulatory

basis for co-operation between government authorities and consumer organisations, including

ways of financing consumer associations and organisations. Human and budgetary resources

have also been increased.

The system of consumer advocates at regional and sub-regional level is being developed

through the training and appointing of advocates. There are currently (June 2001) 295 such

advocates.

Overall assessment

Alignment with the

acquis

in the area of consumer protection has reached a high level, but

further efforts are required in a number of areas.

In order to complete the legal framework concerning the safety measures for General Product

Safety and dangers arising from the use of consumer products, further secondary legislation is

required, notably Regulations on: safety of toys, safety and names of textiles, and checks for

conformity with rules on product safety in the case of products imported from third countries.

With regard to non-safety measures, further legislative work is needed in order to fully

transpose and follow up the transposition of the directive on indication of the prices for products

offered to consumers and the directive on consumer credits. In addition, the law on the

protection of consumer rights and responsibility for damage caused by a dangerous product

adopted in March 2000 will require further attention in order to bring it more closely in line with

the

acquis,

in particular with regard to door-to-door selling and distance contracts.

A comprehensive strategy for the proper implementation of a market surveillance system is

essential and will need to ensure that legislative gaps are identified and filled, as well as to

address the development of appropriate enforcement procedures. Additional issues to be

covered include raising the level of awareness, support and co-operation with consumer

organisations and the general public.

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The workload facing the OCCP and the Trade Inspectorate is rapidly expanding. Both bodies

have seen increases in the resources allocated to them. Careful attention will have to be paid to

ensure that sufficient resources are available so that consumer complaints are dealt with in an

effective and timely manner.

A continuation and extension of existing efforts to disseminate knowledge of new legal

regulations among the staff of the OCCP and Trade Inspectorate, ministries and other

governmental institutions, courts, entrepreneurs and consumers, will be required so as to ensure

the effective operation of consumer protection.

Chapter 24 - Co-operation in the field of justice and home affairs

Since the 2000 Regular Report, fundamental legislative steps have been taken in Poland in the

fields of border controls, police co-operation, data protection, visas and migration. However,

only limited progress can be reported on the fight against fraud and corruption and in judicial

co-operation.

In the field of

data protection,

an amendment to the Personal Data Protection Act was

adopted in August 2001. The Minister of Justice issued in June 2001 an Ordinance on personal

data collection in the National Penal Register, and removing such data from this Register. It

should be noted that Europol has declared the level of data protection sufficient for its purposes

provided that certain key aspects are addressed.

As far as

visa policy

is concerned, the amendment to the Aliens Act which was adopted in

June 2001 and entered into force in July 2001 brings Poland into close alignment with the

acquis.

An “EU” format for Polish passports is provided for by a Regulation adopted in May.

During the reporting period, Poland terminated visa exemption agreements with Azerbaijan,

Georgia, Kazakhstan, Kyrgyzstan, Moldova, Mongolia, Tajikistan, Turkmenistan and Cuba.

The intended visa introduction for Belarus, Russia and Macedonia has not yet taken place, due

to the fact that the negotiations with the countries concerned have not been completed, and due

to a lack of funding. Visas continue to be granted at borders in increasing numbers. This

practice is not in line with the

acquis.

A series of measures have been introduced in the past twelve months with a view to

strengthening administrative capacity in this field. Since spring 2001, the Polish computer system

for migration POBYT has been available on-line in the relevant Voivodship (regional)

departments and at 72 border-crossing points. Some modest additional strengthening of

consular structures has been undertaken compared to that reported last year. In order to

prepare for the visa introduction for Ukraine, the location has been chosen for the opening of

two new consular posts in Ukraine: Lutsk and Odessa.

Significant progress has been registered in alignment with, and implementation of, the acquis in

the field of control of

external borders

, and as regards preparations for the

Schengen

agreement. In legislative terms, a series of amendments made to the 1990 Law on the Border

Guard were enacted in April 2001. The new provisions extend the powers of the Border Guard

both in geographical and authorisation terms, the competence of the Border Guards for

combating crimes has been extended and they have been granted "police-type" operational

powers for border protection, border traffic, for combating corruption, for control of

correspondence, for wire tapping and controlled delivery. The Border Guard is no longer

limited to work within 15km of the border and can now operate throughout Poland for crimes

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committed on all of the national territory; it obtained also access to data bases held by public

administration institutions.

Feasibility studies for the introduction of the Schengen Information System and for the Schengen

separation of passenger flows at Warsaw airport have been completed.

Considerable traffic flow increases occurred in 2000 at the future external borders, with an

increase of 39% at the sea border and of 17% on the future external land border. However, in

the first half of 2001, passenger traffic has decreased (-17,6% all borders considered). Refusal

of entry increased overall by 32.7%, and by 42% at the Eastern border. In more than 70% of

the cases, entry was refused, not on the basis of false or invalid documents, but on the basis of

false declarations on the purpose of the journey, lack of confirmation of reservation of

accommodation in Poland, or of sufficient means of subsistence. The number of aliens,

apprehended after attempts to cross the border illegally, increased by 37,4%, compared to the

first half of 2000. Readmissions from Poland remained otherwise stable.

The Integrated Border Management Strategy, adopted by the Council of Ministers in June

2000, is being implemented progressively but the budgetary shortfall compared with target

spending is impeding progress. An addendum to this Strategy was adopted in June 2001.

Substantial efforts were made in terms of infrastructure and staffing. Four new border posts

were established during the reporting period (one in Punsk, at the border with Lithuania, two at

the border with Ukraine, in Ustrzyki Gorne and in Krylow and one at the border with Belarus,

Narewca)); another three are under construction on the borders with Belarus and with Ukraine.

The wages of border guard officers increased by around 20% by the end of 2000. This

measure has however had a significant impact on the already limited border guard budget and

has meant that only 500 new border guard officers could be recruited in 2000 (instead of 2000

new officers, which was the target).

Five helicopters have been purchased for use at the Eastern border to fulfil the need for air-

borne surveillance. Good progress continues to be made in terms of accessibility to the

databases of the Border Guard, at both regional and local level. A wide area network is in the

process of completion starting with the Eastern border with the central server now linking

horizontal regional commands. However, in view of competing human resources and

infrastructure priorities, money for equipment purchase is severely stretched.

Co-operation between the Border Police of Germany and the Polish Border Guard is effective

and includes several types of modern cross-border co-operation concepts (including joint

patrols, joint operations, liaison officers, common information points).

Poland adopted a Schengen Action Plan in August 2001. This constitutes a supplement to the

Integrated Border Management Strategy for the planned legislative and institutional changes

resulting from the Schengen acquis.

As regards

migration,

the new Aliens Law, referred to above, brings a number of noticeable

changes, which in many respects complete the adjustment of Polish legislation to current

European standards. The new law provides for comprehensive coverage of admission of third-

country nationals for employment and study purposes, and for residence permits for relatives. A

new chapter also regulates the conditions for family reunification. New provisions have also

been inserted as regards expulsion and deportation of aliens. Moreover, the new Aliens Law

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provides for the creation of a centralised Office for Repatriation and Aliens, which started its

activity on 1

July, and will be competent for any issue relating to the treatment of aliens in

Poland including: repatriation, entry of aliens on the territory, transit of aliens across the Polish

territory, granting permits to settle, residence permits and asylum status.

During the reporting period, agreements on readmission with Armenia, Ireland and Estonia were

signed.

In respect of

asylum,

the formal acquis was already largely transposed by the Aliens Law of

1997 and considerable legislative progress has now been made towards further alignment, by

means of the 2001 amendment to the Aliens Law referred to above. The most significant

changes relate to the introduction of the concept of “safe country of origin”, and of a clear

definition of manifestly unfounded applications, as well as to provisions for the identification of

unaccompanied minors. The time limit for application has been removed. The provision of a

personal interview prior to a denial of admission to the asylum procedure has been initiated.

Additionally, temporary protection is now foreseen for asylum seekers. The law also introduces

a six-month time limit for producing a decision on applications. Some adjustments have been

made to the preparation provisions for the Dublin Convention.

There was a significant increase in applications in 2000, with 4 589 applications, against 3 031

in 1999 (a 50% increase). A quarter of the applicants (1 153) held Russian citizenship, mainly

coming from Chechnya. 906 applicants were Romanians, 823 Armenians, 340 Bulgarians, and

299 Afghanis.

In the field of

police co-operation and the fight against organised crime

, the 1990 Law on

Police was amended in August 2001. This amendment gives the police more operational means

in the fight against organised crime. With the new provisions, the police will be entitled to check

suspects’ bank accounts, as well as insurance accounts.

The need to combat organised crime and economic crime has been widely recognised as a

priority in Poland. Since December 2000, Poland has had a Financial Intelligence Unit located

in the Ministry of Finance for the tracking of transactions.

Salaries were increased by approximately 20% at the end of 2000. The Police are preparing a

programme for the internal fight against corruption and a special unit was set up for this

purpose.

The police service continued to upgrade its technology and in each voivodship, the main high-

speed telecommunications modes are coming on stream. The extension and strengthening of the

police national network also involve the purchase of terminals giving police officers increased

access to the central databases. The Automated Fingerprint Identification System (AFIS), set

up centrally with EC assistance in early 2000, is being extended at regional and local levels; to

this end, the Chief Commander of Police and the Commander-in-Chief of Border Guards

signed an agreement in May 2001.

The Central Bureau for Investigation (CBI), set up in spring 2000, is a key actor as regards the

police role in the fight against organised crime. A first assessment of its activities shows good

results in this area. A number of leaders of criminal organisations were arrested during the

reporting period. Between April 2000 and April 2001, 158 criminal groups were dismantled, of

which 23 had an international dimension.

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A section of the CBI is dealing exclusively with the Crown witness scheme, in close co-

operation with the central and regional organised crime sections of the Prosecutor’s office. An

amendment to the Law on the Prosecutor’s Crown witness was adopted in December 2000

and entered into force in February 2001.

In May 2001 the Commander-in-Chief of National Police signed an agreement with the Central

Board of Customs on a detailed procedure of co-operation between Police organisational units

and customs agencies in the area of preventing and combating crime.

In August 2001 Poland adopted a Law on Collecting, Processing and Transferring of Criminal

Information. This law sets up the National Centre of Criminal Information. This Centre will co-

ordinate the collecting, processing and exchange of criminal intelligence both between law-

enforcement agencies and others in Poland and with relevant corresponding structures abroad.

In October 2001, Poland signed an Association Agreement with Europol which will allow

Polish law enforcement bodies to have access to certain criminal intelligence information held by

Member States. It also foresees the secondment of a permanent Polish liaison officer to

Europol. This Agreement clears the way for Poland to fully adhere to Europol upon accession.

A series of bilateral co-operation agreements have been concluded. Two international

agreements on co-operation in the field of organised crime were signed in November 2000, one

with Belgium and one with Spain. The co-operation will be organised mainly by means of

exchange of liaison officers. Additionally, in May 2001, a bilateral agreement for co-operation

in the fight against organised crime was signed between the Ministers of the Interior of Ireland

and Poland. To date, Poland has concluded similar co-operation agreements with Finland,

Lithuania, Germany and Ukraine. A work programme for the fight against organised crime was

also agreed upon with Russia in November 2000.

A total of 1 266 910 crimes were reported in Poland in 2000, which represents a significant

13% increase compared to 1999. The worsening crime statistics were put down to the raise in

theft, primarily petty theft. A plan to fight common crime was prepared in 2000 and launched in

February 2001, focusing on: car theft, home burglary, theft with assault, robberies involving

extortion and violence. Among the activities of organised crime groups are the theft and

smuggling of vehicles, the production of and trafficking in drugs, the extortion of protection

money and robbery; the hijacking of trucks has reappeared as a threat. Trafficking in women

remains a cause for concern.

The 2000 UN Convention against Transnational Organised Crime was ratified by the

Parliament in July 2001.

Concerning the

fight against fraud and corruption,

legislation to implement the 1997 OECD

Convention on Combating Bribery of Foreign Officials in International Business Transactions

entered into force in February 2001. The entry into force, in December 2000, of the Act on the

amendment to the Criminal Code, to the Code of Criminal Procedure, to the Act on Combating

Unfair Competition, to the Act on Public Orders and the Banking Law facilitates the accession

to the 1995 Convention on the Protection of the EC’s Financial Interests as well as its three

Protocols and to the 1997 Convention on the fight against corruption involving officials of the

EC or officials of Member States of the European Union. Further, in August 2001, the Criminal

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Code was amended in order to cover corruption in the form of providing non-material benefit to

a third party (see

also Section B.1.1. - Democracy and the rule of law).

The 1997 Law on

drug

addiction was amended in October 2000. The main provisions covered

demand reduction and the possession of small quantities of drugs for personal use. Secondary

legislation concerning the creation of a Council for Counteracting Drug Addiction was passed

and entered into force in March 2001, creating the inter-ministerial advisory body which is in

charge of the co-ordination of policy development in the area, as well as drug demand and

supply reduction. The 1997 Law was amended for a second time in September 2001. This new

amendment foresees the establishment of a National Focal Point for cooperation with the

Lisbon European Monitoring Centre on Drugs and Drug Addiction (EMCDDA). Within the

Drug Addiction Bureau, situated within the Ministry of Health, an Information Centre for Drugs

and Drug Addiction was established which should become this National Focal Point. A Decree

of the Minister of Health on the manufacturing, processing, converting, importing or exporting as

well as marketing narcotic drugs came into force in October 2000.

As regards

money laundering,

the relevant law was adopted in September 2000, providing

for the setting-up of a horizontal structure in charge of collecting, processing and exchanging

information on financial transactions. The 1990 Council of Europe Convention on Money

Laundering, Search, Seizure and Confiscation of the Proceeds from Crime was ratified in

December 2000.

With regard to

customs co-operation,

it should be noted that 10 task forces, including the

Office for State Security, the Fiscal board, the Police, the Customs and the Border Guard,

were set up in 2000. The General Inspectorate of Customs signed an agreement with the

Commander-in-Chief of the Border Guard in February 2001 regarding joint undertakings. It

also signed an agreement with the President of the Central Board of Customs in May 2001

regarding mutual assistance (information exchange, investigative and control activities,

international co-operation, training and exchange of experiences, co-operation of the internal

audit branches).

With regard to

judicial co-operation,

the completion of the reform of the judicial map to

harmonise it with the administration division took place in July 2001. The number of civil-

criminal chambers was increased to 292, an additional 56 should be created by the end of

2001, to reach a total of 346.

A new commercial code entered into force in October 2000. A new code, governing the

procedure applying to petty infractions entered into force in October 2001.

The amendment to the Criminal Code and Code of Criminal Procedure of August 2001,

referred to above, facilitates the adherence to the 1995 Convention on Simplified Extradition

Procedures between the Member States and the European Union. The amendment to the

Criminal Code also covers the

ne bis in idem

principle.

The 1999 Strategy on computerisation continues to be implemented gradually. The total number

of computers within the judiciary increased to 7,500 by the end of 2000.

A number of corruption cases have been reported in the media especially since 2000.

However, the number of formally reported cases is not significant in the light of a body of over

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13,000 magistrates. This difference between perception and reported cases may reflect the

influence of the far reaching immunity provisions for judges.

The executive, and the Minister of Justice in particular, continues to retain administrative and

supervisory authority over the organisation and affairs of the judiciary. Judges frequently work

for the Ministry of Justice while adjudicating cases, which risks compromising their

independence.

Overall assessment

While the legislative alignment in this area is encouraging and should be pursued, implementation

still requires serious efforts and sufficient funding should be foreseen to enable this. Particular

attention should be given to visa related issues, the protection at external borders and the

implementation of the recently amended Aliens Law.

The amendment to the 1997 Law on Personal Data Protection has brought Poland more closely

in line with the

acquis.

The Office of General Inspector for Protection of Personal Data

received 1628 legal enquiries in 2000 and 1223 legal enquiries up to the end of September

2001. The ratification process for the Council of Europe Convention on the Protection of

Individuals with regard to the Automatic Processing of Personal Data should still be completed.

With the 2001 amendments to the Aliens Act, Poland has largely completed the legislative

alignment of its

visa policy

with that of the European Union. Poland has also terminated existing

visa-free regimes with a large number of countries, and is preparing the imposition of visas on all

countries necessary to ensure full alignment before accession. Visa-free regimes have still to be

abolished in the cases of Belarus, Russia, Macedonia and Ukraine. The administrative capacity

remains insufficient mainly due to lack of funding, despite further computerisation efforts. It is

crucial for Poland to improve its administrative capacity and provide for the necessary funding in

view of the very large number of visa applications expected.

As regards

external borders

and preparations for

Schengen,

steady significant progress is

being made according to its Integrated Border Management Strategy. Constraints are

essentially of a financial nature. However, Poland’s remaining lack of visa alignment in respect

of Russia, Belarus and especially Ukraine (see above) is proving detrimental to the effectiveness

of the border management. This is especially important as the pressure is increasing on the

external borders, especially on sea borders. “Economically motivated” smuggling of for example

alcohol and cigarettes is promoting the growth of organised crime networks. While separation

of passenger flows is being studied for Warsaw airport, similar steps need to be taken for the

other international airports.

The organisational division between border crossing staff and the staff on “green” border

surveillance may be hampering efficient implementation of border security especially at local

level. In addition, the border guard are understaffed with over 30% of posts vacant and staff

rotation relatively low.

As regards

migration,

the new Aliens Act and the setting up of a centralised office is a major

step forward. Concerns exist as to the future capacity of the services as accession approaches

and increasing numbers of illegal immigrants have to be catered for.

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In respect of

asylum,

the new Aliens Act has effectively brought Poland up to the

acquis

level

in legislation and organisation. The Council for Refugees is the appeal body in first instance and

the Supreme Administrative Court in second instance. In both instances, the lodging of an

appeal has a suspensive effect. Concerns exist as to the lengths of procedure and the

administrative capacity but it is expected that the new provision on manifestly unfounded

applications will significantly reduce these. A list of safe countries of origin is however still

missing. Poland needs to make more substantial preparations for the application of the Dublin

Convention. As far as administrative capacity is concerned, the number of trained staff should

be increased in order to maintain a reasonable average length of procedure. The Border Guards

also need to have regular training in this field since they are often the first to encounter the

asylum seeker. Additional efforts are also required to facilitate the integration of recognised

asylum seekers and refugees in Polish societies.

In the field of

police co-operation and the fight against organised crime

, further progress

has been made on the legislative front with the adoption of the amendment to the Law on Police

and the new Law on Collecting, Processing and Transferring of Criminal Information. The

signing of the Association Agreement with Europol was also a very important achievement in

this area. Although some very good progress has been made in staff motivation and salaries,

many experienced officers are still leaving the force and there are doubts whether organised

crime, a major problem in Poland, is under control. Law-enforcement agencies have made

significant strides but still appear to be rather weak when it comes to detecting and gathering

evidence in the economic area. Official data on economic crime in Poland still fail to reflect the

full extent of the problem and the newly established Financial Intelligence Unit will need time to

become a fully operational partner.

As noted already in last year’s Regular Report, despite recent progress, the co-ordination of the

various law-enforcement services remains difficult. However, it is hoped that the setting-up of

the National Centre of Criminal Information (on the basis of the new Law on Collecting,

Processing and Transferring of Criminal Information) will enhance such co-operation. Of more

concern is the continuing involvement and even strengthened role of the State Security Office in

day to day crime fighting. The secrecy requirements under which the office works make

international police co-operation difficult. A reappraisal of the situation seems necessary.

Regarding the

fight against fraud and corruption,

most of the required legal instruments for

efficient actions are in place. However, an element which is still missing in the Polish legislation

relates to the responsibility of legal persons for a number of offences. The organisational

framework and resources to counter corruption remain weak and inadequate. In general, the

Polish Customs Administration does not have the necessary means to efficiently fight customs

fraud. While it fulfils its powers of immediate control at the border posts, an important number

of customs offences, revealed by the police, take place within the territory.

Furthermore, with regard to the protection of the financial interests of the European

Communities, Poland needs to complete aligning its legislation with the acquis, and in particular

with the 1995 Convention on the Protection of the Financial Interests of the European

Communities and its Protocols.

The Council of Europe Civil Law Convention on Corruption and the Council of Europe

Criminal Law Convention on Corruption remain to be ratified.

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Poland is party to the international conventions listed under the

acquis

in the field of

drugs,

with

the exception of the 1995 Agreement on Illicit Traffic by Sea. The twice amended Law on

Counteracting Drug Addiction aims to complete Poland’s efforts to reach legislative alignment in

this area. Preparation works have been undertaken, but further efforts are needed to achieve

the establishment of a National Focal Point, to co-operate with the Lisbon European

Monitoring Centre on Drugs and Drug Addiction (EMCDDA). Meanwhile, the number of

domestic drug users has increased consistently. Legislation on drug precursors is still not fully

aligned with the acquis.

As regards

money laundering,

the newly inaugurated Financial Intelligence Unit will take some

time to become fully effective and the issue of resources may have to be revisited in the light of

the number of transactions to be processed.

While Poland has made some progress towards alignment with the

acquis

in the field of

customs co-operation,

there are still some matters of concern. Corruption is still a problem,

and risk analysis is not sufficiently developed. Co-operation between Customs and Border

Police is rather weak at national level but the agreement signed between the General

Inspectorate of Customs and the Commander-in-Chief of the Border Guard in February 2001

regarding joint undertakings is a step in the right direction. This co-operation is sufficiently

operational at the regional level.

As far as

judicial co-operation

is concerned, further efforts will be required in order to ensure

the appropriate level of co-operation in civil matters, notably as regards mutual recognition and

enforcement of judicial decisions, and direct Court-to-Court dealings in cross-border situations.

All the

human rights

legal instruments under the Justice and Home Affairs

acquis

have been

ratified by Poland, with the exception of the 1981 Council of Europe Convention on the

Protection of Individuals with regard to Automatic Processing of Personal Data, and Protocol 7

to the 1950 European Convention for the Protection of Human Rights and Fundamental

Freedoms which lays down the

ne bis in idem

principle. The amendment of the Criminal Code

in August 2001 to cover this principle is a positive development in this regard.

Chapter 25: Customs union

Steady progress has been achieved by Poland in the field of customs since the last Regular

Report.

Alignment between Polish legislation and the

EC Customs Code and its implementing

provisions

has been virtually completed through the Amendment to the Customs Code which

entered into force in March 2001. This covers binding origin information, processing under

customs control, temporary importation and re-exportation.

Regarding the

customs

acquis

outside the Customs Code

, an Ordinance of the Minister of

Finance notably removed (as from January 2001) the use of customs clearance fees as a means

of financing the Customs Service. The latter is now entirely supported by the Polish national

budget. The Ordinance also brought the Customs Service directly under the control of the

Ministry of Finance. During the reporting period, Poland incorporated the Convention on

Customs Treatment of Pool Containers used in International Transport into its legislation.

The December 2000 amendment to the Customs Code Law, to the VAT law and to the excise

law entered into force in March 2001

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With regard to administrative capacity, The “Business Strategy for the Polish Customs

Administration until 2002” is being implemented. The Polish Customs Administration is currently

undergoing a comprehensive process of modernisation and development of computer-based

management and control. A working group for further harmonisation of the Polish Customs

Code was appointed by the President of the Central Board of Customs in September 2001. Its

main objective is to adapt the Polish customs provisions to the new EC customs acquis issued in

2000-2001. A national IT system of monitoring tariff ceilings (INTA SAD) was implemented in

April 2001. The computerised Integrated Customs Tariff system (ISZTAR) and legal

information system (ALEXIS) are nearing completion. The remaining systems are still

developing for: maintenance and distribution of data (CELESTA), finance and accounting

(ZEFIR), Customs declaration (CELINA) and a transit system (NCTS).

To improve efficiency, an administrative rationalisation of local offices is taking place. New

regional customs laboratories have been opened in Bialystok, Wroclaw and Koroszczyn.

Customs offices have been supplied with the latest customs inspection equipment, particularly in

the case of the customs posts situated on Poland’s eastern and northern borders. In addition, a

task force to prepare the customs administration for the management of the Common

Agricultural Policy has been established.

A number of measures have been undertaken to improve the integrity of the Customs service.

With regard to remuneration of personnel, wages have been increased both to address one of

the causes of corruption and to attract more university graduates. In the continuing fight against

corruption, the Customs Ethics Code was completed in September 2000. The Code has been

supplemented by a “guide” of several dozen pages which contains comments on doubtful and

debatable cases.

Smuggling continues to be a problem. In 2000 there was a 50% increase in the seizure of

smuggled alcohol and a 66% increase in the seizure of smuggled tobacco. Legal proceedings

were initiated in over 20 000 cases concerning smuggling attempts, three quarters of which took

place on Poland’s eastern border.

Overall assessment

With the entry into force in March 2001 of the Amendment to the Customs Code and the

adoption of additional implementing measures, Poland has achieved a high level of legislative

alignment, and on the basis of the clear indicators of progress in the implementation of the

Business Strategy, it appears that it is making strides in improving its administrative capacity –

although corruption remains a concern.

Poland is a party to the essential customs conventions. Increasing the speed of implementation

of the computerisation systems with a view to interconnect with EC computerised systems is

now crucial, and sufficient budgetary resources and logistical support need to be provided. In

this respect, it must be emphasised that flawlessly functioning EC-compatible IT systems should

be put in place at least one year before accession to the EU in order to guarantee

interconnectivity with the EC customs computerised systems. Many border crossing points still

lack modern equipment common in EU customs administrations. This applies particularly to

laboratories and with respect to detection equipment, particularly for container screening.

In addition, Poland should continue its efforts to address the problem of waiting times at the

borders, in collaboration with the partner countries. More frequent application of simplified

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procedures would assist in this respect, as would greater co-operation with the public, although

it should be noted that transparency has improved significantly. Contacts with hauliers and other

economic players have been institutionalised.

Co-ordination with other border-related services, especially border guard and police, continues

to be an area of concern. This co-ordination has been put on a structured basis by several

interdepartmental agreements concluded during the reporting period. These now need to be put

into action. The fight against customs fraud and economic crime also requires further attention.

Chapter 26: External relations

Since the previous Regular Report Poland has continued to align with the

acquis

with regard to

the common commercial policy and to co-ordinate positions and policies within the World

Trade Organisation, in particular with regard to the preparation of the New Round.As regards

the

common commercial policy,

upon accession Poland will be required to align its tariffs with

those of the EC. Poland's applied tariffs currently average 15.1% (MFN) on all products,

34% on agricultural products, 18.3% on fishery products and 9.9% on industrial products. By

comparison the EC tariffs

currently stand at 6.3% on all products, 16.2% on agricultural

products, 12.4% on fishery products and 3.6% on industrial products.

There have been further steps to align with the

acquis.

In June 2001, the law on protection

against an excessive imports of goods into the Polish customs territory entered into force. The

legislation replaces an earlier law on protection against excessive imports and is intended to

bring Polish legislation in line with the

acquis

and Poland's WTO obligations.

With regard to the

acquis

in the area of dual-use goods, new legislation on foreign trade in

goods, technologies and services of strategic importance entered into force in January 2001

along with the necessary secondary legislation for its implementation. In particular, the law

allows for the adoption of the "Index of Double-Use Goods and Technologies Exportable

Under Permission”; creates a system of general and global permits to be obtained for the

exportation, importation and transit of goods and technologies subject inspection and facilitates

the inspection of goods not listed in the index as appropriate.

In the field of export credits, amendments to the law on Export credit came into force in January

2001. These are intended to further align Polish legislation with the

acquis.

Concerning

bilateral agreements with third countries,

Poland has concluded negotiations on

a Free Trade Agreement with the Republic of Croatia. There have been no further

consultations with Morocco on the possibility of a Free Trade Agreement.

During the reporting period, Poland concluded a non-preferential agreement with the United

States of America, which foresees a reduction of tariffs, in some cases to the level of the EC's

common external tariff, for over one hundred products on an MFN basis. This agreement was

negotiated without any prior consultation or information of the EU.

WTO bound tariffs after full implementation of all concessions including - where possible - estimated ad valorem

equivalents of specific and compound tariffs.

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Within CEFTA, the member countries, including Poland, signed Additional Protocol No. 8 on

the updated version of the Pan-European cumulation of origin of goods

(see chapter 25 –

Customs Union).

With regard to

development policy,

co-operation and assistance, Poland is an active member

of the OECD and it is adapting its development practices to the principles laid down by the

Development Assistance Committee. For the implementation of

humanitarian aid

initiatives,

the authorities co-operate with Non-Governmental Organisations established in Poland. Total

bilateral and multilateral

external assistance

given by Poland to developing and Eastern

countries in 2000 amounted to € 44M.

Overall assessment

Poland has achieved a generally high level of alignment with the acquis. Considerable effort will

be necessary to ensure that short term pressures do not see Poland undertake measures which

will take the country away from the

acquis

in the field of commercial policy.

Where alignment with the Community

acquis

on commercial policy is necessary, good progress

has been made with regard to dual-use goods. In the case of export credits the developments of

the past year should be built on to achieve full alignment with the

acquis.

The EU and Poland have established a framework for co-operation regarding WTO issues both

at ministerial and at departmental level. Poland has been supportive of EU policies and positions

within the WTO framework. As regards the new round, Poland concurs with the EU on the

need to launch a comprehensive trade round as soon as possible and shares the view that the

results of work under the built-in agenda would be less substantial in its absence.

Poland is a signatory to the Information Technology Agreement. It is an observer to the WTO

plurilateral agreements on Government Procurement and Civil Aircraft. Further co-ordination is

needed to ensure the alignment of Poland's GATS commitments with the EC's commitments

and MFN exemptions. Similarly with regard to the WTO Agreement on Trade in Textiles and

Clothing (ATC), work is underway to use the third stage of integration under the ATC to align

Poland's integration programmes on those of the EC, although some points remain outstanding.

In addition to its bilateral free trade agreements with Estonia, Latvia and Lithuania, the EFTA

countries, Turkey and Israel, Poland is a member of CEFTA. In this area further progress is

necessary in aligning with EC international trade obligations; further efforts are required to

ensure that Poland keeps the Union fully informed about existing trade agreements or

negotiations aimed at the conclusion of any new trade agreements with a third country. Any

international agreement which is incompatible with the obligations of membership will have to be

renegotiated or renounced prior to accession.

Poland will need to bring into conformity with the

acquis

the Bilateral Investment Treaty

concluded with the US. While Poland has committed itself to meeting this obligation, concrete

steps in this direction have been slow to materialise.

Poland’s alignment with and future participation in the common commercial policy is

administered by the Ministry of Economy. The administrative infrastructure which needs to be in

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place as regards customs services is addressed under the chapter relating to the Customs Union

(Chapter

25 – Customs union).

Development and humanitarian aid are administered by the Ministry of Foreign Affairs. For the

purpose of Poland’s future financial contribution to the European Development Fund, Poland’s

management of its national budget organisation and management of flow of funds to the EC

budget is addressed under

chapter 29 – financial and budgetary provisions.

Chapter 27: Common foreign and security policy

Since the previous Regular Report Poland has continued to align its foreign policy with that of

the European Union and has participated constructively in the framework of the Common

Foreign and Security Policy.

The regular

political dialogue

established by the Association Agreement with Poland is

proceeding smoothly and Poland continues to orient its foreign and security policy towards the

Union. It continues to participate actively in the framework of the Common Foreign and

Security Policy (CFSP), including the meetings at the level of Political Directors, European

Correspondents and Working Groups.

Poland has shown a keen interest in the development of European Security and Defence Policy

(ESDP) as part of the CFSP and has actively participated in the exchanges in this context with

the EU, in EU + 15 format (i.e. non-EU European NATO members and candidates for

accession to the EU) and in EU + 6 format (i.e. non EU European Members of NATO).

As regards alignment with

EU statements and declarations

, Poland has regularly aligned its

positions with those of the Union and, when invited to do so, has associated itself with the

Union’s

joint actions and common positions.

Since October 2000, together with the other

Central and Eastern European countries, Poland has associated itself with a common action of

the EU concerning the contribution of the EU to the fight against accumulation and the

destabilising proliferation of lightweight and small calibre firearms. It also associated itself with

8 EU common positions, including 3 on the Federal Republic of Yugoslavia.

Since the 2000 Regular Report progress has been made in adopting the necessary legislative

framework for effective participation in the CFSP. Poland continued to basically comply with

international sanctions and restrictive measures

imposed by the UN or the EU. A new

dual-use exports law compatible with EU regulations entered into force in January 2001.

Related legislation on the administration of international trade was introduced in May 2001.

During the reporting period, Poland played an active role in the first Capacities Commitment

Conference in November 2000, earmarking a brigade of up to 2500 troops to be part of EU

Rapid Intervention Force missions from 2002.

Relations with Russia have considerably improved with a visit from the Russian Prime Minister

and an exchange of visits of Foreign Ministers. As regards, specific co-operation related to the

Kaliningrad enclave, in April 2001 the Governor of the Kaliningrad district paid a visit to

Poland. Also in April, the Kaliningrad region opened an official mission in Olsztyn, the capital of

the Warminsko-Mazurskie voivodship.

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Poland continued to participate actively in regional co-operation fora such as the Council of the

Baltic Sea States, the Visegrad group and the Central European Initiative. It has supported the

Stability Pact for south-east Europe.

As for defence co-operation, Poland has participated in a series of UN (Lebanon, Syria/Golan

Hights, Bosnia, Kosovo) and OSCE peacekeeping and observer operations. In this context

Poland currently has over 1500 troops on peacekeeping duties in the Balkans.

To further strengthen the coherence of Poland’s foreign policy with the EU's CFSP, the Polish

Ministry for Foreign Affairs created the post of a Policy and Security Committee interlocutor in

2001. A Liaison Officer to the Military Committee has been appointed.

Overall assessment

Poland's alignment with the

acquis

in the CFSP is overall satisfactory. As the

acquis

in the field

of foreign policy and security develops further, Poland should maintain the orientation of its

foreign policy in line with that of the Union.

Following the Kosovo crisis, Poland showed active support for and interest in the Stability Pact.

It participated in the SFOR peacekeeping operations in Bosnia-Herzegovina and in KFOR in

Kosovo.

Poland continues to participate in regional co-operation schemes, such as the structure

established with Lithuania, Latvia and Estonia, and the trilateral co-operation with Germany and

Denmark. In these frameworks, joint battalions are functioning. Poland also co-operates closely

with France and Germany in the context of the Weimar Triangle, in which common exercises

are being organised on a rotating basis. In addition, Poland has also developed bilateral defence

co-operation agreements with Ukraine, and with Lithuania. In both cases, the main provisions of

the agreements concern co-operation in peacekeeping missions and common undertakings

(exercises and missions).

Poland participates actively in the discussions related to the EU Action plan on the Northern

Dimension. In terms of regional political dialogue, Poland continues to participate actively in

regional co-operation forums. Particular effort is made to ensure contact with and between

regional authorities, especially as regards cross-border co-operation, also with EC assistance,

in the context of the 14 Euroregions established along all the Polish borders. Poland has sought

to strengthen its bilateral relations with neighbouring European partners. In particular, contacts

at the highest political level continue to be very frequent with Lithuania and Ukraine.

Poland has aligned itself to the content and principles contained in the EU Code of Conduct on

Arms Exports, but there is concern that it needs to make more effort to ensure implementation

of its criteria.

Concerning the administrative capacity to implement the provisions relating to the CFSP,

Poland has a well-staffed Ministry of Foreign Affairs. However, the current structure within the

Ministry of Foreign Affairs still does not contain a position equivalent to that of political director.

This will require revision.

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The Ministry of Foreign Affairs is connected to the Associated Correspondents’ Network

information system through which the EU communicates within the CFSP with the associated

partners.

Chapter 28: Financial control

During the period covered by this Regular Report, significant progress has been made in this

area

The amendment to the Public Finance law to establish a

Public Internal Financial Control

(PIFC) system was adopted in September 2001. This Act introduces financial management and

control systems. The establishment and maintenance of these systems is the responsibility of

government spending centres, ministries, agencies and the like, while the central co-ordination

unit in the Ministry of Finance will provide guidance. The new concept of a functionally

independent internal auditor in such spending centres has also been appropriately introduced.

The Ministry of Finance, through the newly established post of an equally independent “General

Internal Auditor” to be occupied by a professional and non-political senior civil servant, will be

responsible for the development and co-ordination of harmonised methodology relating to both

financial management and control systems and internal audit services. This is therefore an

important step forward. The new Act will come into force in January 2002 and should

accelerate the implementation of the new PIFC system, for which a policy paper is being

drafted.

There have been no developments in the area of

external audit.

The adoption of the above amendment is also a step forward with regard to the

control of

structural action expenditure.

With regard to EC pre-accession funding, some progress has

been made towards the accreditation of the SAPARD Paying Agency and the National Fund

for the purposes of the SAPARD programme. Sector Authorising Officers have been appointed

for the management of ISPA funds. However, little progress has been achieved in the area of

control and audit of ISPA and Phare funds, in particular with regard to preparations for

applying the Extended Decentralised Implementation System (EDIS) procedures.

Regarding the

protection of EC financial interests,

amendments to the Law on fiscal control

and customs inspection which entered into force in December 2000 now provide for the right of

representatives of EC bodies to participate in control activities, with the authorisation of the

General Inspectorate of Fiscal Control and the General Customs Inspectorate. With the help of

OLAF, an anti-fraud unit has been established within the General Customs Inspectorate, but

this unit has yet to become fully operational. In September a "High Level Working Group for

Protection of EU's interests" was established within the task force for co-ordination of the fight

against economic crime.

Overall assessment

While Poland has well advanced with regard to the legislative alignment in the area of Public

Internal Financial Control, further substantial efforts are required in order to start and develop

the process of implementing sound financial control systems.

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First and foremost, this requires the accelerated implementation of the new PIFC system. This

in turn will depend upon both the rapid adoption of the necessary secondary legislation and (on

the basis of a well-defined strategy) the appropriate strengthening of administrative capacities,

including appropriate training and equipment. The concept of functional independence will need

to be fully implemented and this will need to be reflected in operational and organisational terms

in the spending centres. Considerable training efforts will be required to make the new system

effective.

With regard to external audit, the Supreme Chamber of Control (SCC) is an independent,

trustworthy and highly professional organisation. However, the overall operational capacity of

the Supreme Chamber would be further enhanced by ensuring compliance with internationally

accepted external audit standards.

With regard to the control of structural action expenditure, efforts need to be made in order to

enhance Poland’s capacity for the management of pre-accession funding and future structural

funds. Substantial progress is needed on the implementation of the PIFC concept to apply

EDIS, and the relevant National Fund and Implementing Agency staff resources and skills will

need to be upgraded and expanded to facilitate this. There is an urgent need for further

development of audit trails for pre-accession funds.

With a view to ensuring suitable protection of EC financial interests, Poland needs to further

align its legislation to allow competent EC bodies to carry out on-the-spot checks and to

develop adequate administrative capacity to implement the

acquis,

including the ability of

Poland’s law enforcement bodies and judiciary to address cases where EC financial interests

are at stake. Poland should further develop the anti-fraud unit and ensure that it becomes fully

operational. The High Level Working Group is expected to play a role in developing the

appropriate mechanisms for protecting EC financial interests

Chapter 29: Financial and budgetary provisions

Poland has made limited progress over the reporting period.

Concerning the

national budget and EC co-financed measures

there have been no

developments since the last regular report.

As regards

Own Resources and administrative infrastructure

, legislation was adopted in

October 2000 which sets out a revised method for calculating GDP. This brings Polish practice

closer to the European System of Accounts (ESA 95) standards, although for the statistical

calculations of the GNP resource some inconsistencies remain. The President of the Central

Customs Office has been active in securing agreements with other bodies in the administration,

the Office for State Protection and the General Customs Inspector with a view to preventing

revenue-reducing violations of the customs laws. The Ministry of Finance has taken the initial

decision on the delegation of tasks between bodies with regard to participation in the EC's own

resources system

Overall assessment

The overall assessment in last year's Regular Report remains valid: there has been a moderate

level of alignment with the

acquis

to date.

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The current budgetary legislation, passed in late 1998, requires further amendment and needs to

be supplemented by stronger regulations and administrative procedures to meet the EC

standards. The process of consolidating the budget should be continued, with a reduction in the

number and size of the extra-budgetary funds and the standardisation of the rules of financial

management. The procedures for multi-annual budgeting, within a medium-term expenditure

framework, require development. Capital and operational budgeting for the preparation and the

implementation of expenditure programmes need to be more completely integrated. In parallel,

the capacity for the appraisal, monitoring and evaluation of programmes and projects should be

increased. As noted elsewhere, the central/local financial relationship needs to be clarified, and

modifications to the current regulations probably need to be put in place.

The National Fund is administered by a special Department at the Ministry of Finance with

responsibility for managing EC pre-accession funds. The operating procedures should be

completed.

A very slow pace of progress has been noted in the area of Own Resources, where Poland still

needs to develop appropriate systems for sugar levies and custom duties. While progress has

been made over the last year, Poland still needs to complete full application of ESA 95 for the

proper calculation of the statistical aggregates.

With regard to the control of future EC Own Resources, Poland should continue its efforts to

set up effective instruments to combat VAT and customs duty fraud so that the financial

interests of the EC can be protected.

Where the first steps towards the co-ordination of the various authorities involved in the

application of the system of own resources have been taken these need to be built on with

vigour so as to ensure the necessary level of co-ordination for the efficient operation of the

system.

In addition to the need for central co-ordination for the proper collection, monitoring and

payment and control of funds to and from the EC budget, administrative capacity should be

strengthened in the context of the relevant policy areas described elsewhere in this report, such

as Financial Control, Customs, Taxation, Regional Policy and Agriculture.

The capacity to calculate in a reliable, accurate and transparent way the level of customs duties

and VAT collected by Poland and to calculate Poland’s GNP needs to be improved to allow

calculations to be made in a harmonised and controllable way. Adequate administrative

capacity to duly collect and transfer in a timely manner all Own Resources to the Community

budget, building on the Own Resources Unit established in the Ministry of Finance, will need to

be established prior to accession, as well as the ability to accurately and regularly report to the

Commission on the situation with regard to each of the types of own resources.

3.2.

Translation of the acquis into the national languages

Applicant countries are required to translate the various legal texts constituting the

acquis

into

their national languages by the time of their accession. Primary and secondary legislation alone

represents a considerable volume of acts, roughly estimated at 60,000-70,000 pages of the

Official Journal. To help the candidate countries in this process, assistance is being provided

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under the Phare programme. With the help of TAIEX, a centralised Translation Co-ordination

Unit has been created in each of the ten candidate countries of Central and Eastern Europe.

The work of translating all the

acquis communautaire

into Polish was launched in 1996, and in

July 2000 a Translation Department was created in the office of the Committee for European

Integration to rationalise and speed up the translation and verification procedure. The

department currently has 15 members of staff. Its effect on the process has been marked: over

the last year, the number of pages translated and the number of pages of verified translation

have both increased by around 50%. As of September 2001, 48 000 pages of

acquis

had

been translated, of which 8 300 had been verified.

Without prejudice to the outcome of the accession negotiations, significant additional efforts will

be required in the immediate future if Poland is to meet the timetable set out in its National

Programme of Preparations for Membership. This states that " a vast majority of the translation

is expected to be completed in 2001", with the verification to be completed 6-7 months before

the date of accession

Due attention must also be given to the training of conference interpreters.

3.3.

General evaluation

The reporting period has seen intensive work on the adoption of legislation. In some areas

there have been notable breakthroughs with regard to the adoption of primary legislation. In

others, there has been a steady consolidation of the achievements of 2000 through the adoption

of the necessary secondary legislation on the basis of the framework laws adopted the previous

year. This process of consolidation and putting flesh on the legislative bones is vital in terms of

the future ability to implement the acquis and one where efforts will have to be further

intensified. The need for further effort applies even more to the strengthening of the

administrative capacity to implement the

acquis.

There have been further developments in this

regard, but the divergence between progress in this area and in adopting legislation remains

great.

With regard to the

internal market,

efforts in a number of areas have, following the earlier

adoption of the framework legislation, focused on the secondary legislation necessary to

implement the

acquis

in these areas, in particular standards and certification and state aid. Both

of these are areas in which Poland's existing obligations necessitate implementation prior to the

date of accession, and where there has been limited progress. In the case of standards and

certification considerable efforts are required to develop the necessary administrative capacity.

This is not the case in competition where the capacity exists but where implementation has been

limited. There has been progress in the elements of food safety which relate to the internal

market through the adoption of the framework law but substantial efforts remain in adopting

secondary legislation and developing the administrative capacity. The industrial property law

has been adopted although short term difficulties remain with regard to data exclusivity arising

out of the new pharmaceutical law. While there has been some improvement in administrative

structures, efforts need to be intensified with an emphasis on enforcement.

See "Making a success of enlargement: Strategy Paper and Report of the European Commission on the progress towards

accession by each of the candidate countries", COM (2001) 700.

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Poland’s track record in the free movement of services and capital continues to be good and

further work has been undertaken to strengthen the administrative capacity in these domains.

There has been considerable legislative progress in the area of public procurement and some

progress in terms of the free movement of persons. Further efforts will be necessary to ensure

the smooth integration of Poland into the internal market.

In the telecommunications area implementation of the existing legislation has been gradual.

There has been limited progress in further aligning rates of indirect taxation and further work is

required to ensure that the systems are in place to allow for the exchange of computerised data

between the EC and Poland.

With regard to

EMU,

there have been no legislative developments towards reinforcing the

independence of the National Bank.

There has been some progress in

industrial policy.

Necessary steps have been taken to

resolve outstanding issues in the steel sector but these will need to be followed through with

vigour.

In the

agriculture

sector, a coherent strategy for the sector is still lacking. The substantial

transformation which is needed, in terms of policy, legislation and structures has not yet taken

place in either the agriculture or

fisheries

sectors. In both sectors there has been some

progress with regard to primary legislation, notably in the case of veterinary legislation for

agriculture. The administrative capacity remains extremely weak for fisheries and considerable

weaknesses have become apparent in agriculture in particular with regard to the Integrated

Administration and Control System (IACS) and border inspection, both in the veterinary and

phyto-sanitary fields.

In the

environment

sector significant progress has been made in terms of primary legislation.

The energy and in particular the transport sectors have seen some progress. In all three sectors

considerable further work is also required to strengthen the administrative capacity. This is

particularly the case for the environment where regional as well as national structures need to be

reinforced.

There have been few developments with regard to regional policy. In the social field, progress

has focused on public health legislation, while enforcement remains a matter of concern most

notably concerning occupational health and safety. Additional efforts are required in this

respect, in particular to strengthen the Labour Inspectorates. Progress continues in justice and

home affairs, especially with regard to the border guards and border management, where the

Customs business strategy previously adopted is being implemented. Efforts have been made to

improve the situation with regard to law enforcement bodies dealing with the fight against

organised crime, in particular the police services. These need to be intensified. Further efforts

are required in the customs area to align with the

acquis

and to ensure the establishment of an

effective implementation capacity. Significant legislative progress has been noted in terms of

internal financial control, the challenge will now be to put in place the necessary control

mechanisms.

Poland has made further progress in aligning its legislation notably through secondary legislation.

As has previously been noted this effort needs to be matched, in order to adapt and strengthen

the structures required with a view to accession. In a number of sectors the level of

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administrative capacity lags behind. Further efforts are also required in establishing the

necessary administrative capacity to ensure the sound, efficient and controllable management of

EC funds.

This disparity between progress in the adoption of legislation and the reinforcement of

administrative capacity is reflected in the extent to which the short-term priorities of the

accession partnership have been addressed. There has been further progress in meeting the

acquis

based elements. Continued efforts are needed to set up or strengthen administrative

capacities across the board notably on certification, agriculture, fisheries and regional policy, the

social field, customs and justice and home affairs.

Poland has started to make progress in meeting all the medium-term priorities. Progress has

been varied, with the most obvious developments relating to the legislative elements of the

priorities. This will provide the basis for the development of the necessary administrative

capacity to ensure implementation. Efforts commenced in this regard will need to be intensified.

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C. Conclusion